2023 (4) TMI 345 - AT - Service Tax

Eligibility for abatement exemption Notification No. 01/2006-ST - Commercial or Industrial Construction Service - CENVAT credit was availed but subsequently reversed - HELD THAT - The learned Commissioner has allowed the exemption on the ground that the respondent have reversed the credit which was taken by reversing the credit, the condition of non availment of cenvat credit of the Exemption Notification stand complied with. On the very identical issue, the Hon ble Supreme Court in the case of COMMISSIONER OF CENTRAL EXCISE, MUMBAI- I VERSUS M/S BOMBAY DYEING MFG. CO. LTD 2007 (8) TMI 2 - SUPREME COURT held that even if the reversal is made after removal of the goods, the exemption Notification cannot be denied. Therefore, the issue is settled in favour of the assessee. There are no substance in the Revenue s appeal - Revenue s appeal is dismissed.

Summary

Issues Involved:
Whether the appellant is eligible for abatement exemption Notification No. 01/2006-ST in respect of the Commercial or Industrial Construction Service when the cenvat credit was availed but subsequently reversed.

Analysis:

The appellant had availed cenvat credit for input services used for their output service, violating the condition of Notification No. 01/2006-ST. The Revenue's representative argued that due to the availed cenvat credit, the benefit of 67% of the gross value should not be available to the appellant. Citing the judgment in the case of Kamra Bottling Com. Vs CCE Jaipur, it was emphasized that even if the cenvat credit was reversed later, the exemption condition of non-availment of cenvat credit would not apply. This position was supported by the judgment of the Rajasthan High Court in the same case.

Despite the absence of the Respondent during the proceedings, the appeal was considered for disposal. The Commissioner had initially allowed the exemption based on the reversal of the credit, which was deemed compliant with the non-availment condition of the Exemption Notification. The Commissioner's decision was influenced by various judgments, including those of Chandrapur Magnet Wires, Ashima Dyecot Ltd., Hello Minerals Water Ltd., and others, which supported the dropping of the demand.

The Tribunal noted that the Commissioner's decision to drop the demand was appropriate, as per the judgments cited. The Tribunal distinguished the Rajasthan High Court's decision in the Kamra Bottling Com. case by highlighting that the Supreme Court's ruling in Bombay Dyeing & Mfg. Co. had precedence. The Supreme Court had held that even if the reversal of credit occurred after the removal of goods, the exemption Notification could not be denied, ultimately favoring the assessee.

Relying on the series of judgments presented, the Tribunal found no merit in the Revenue's appeal and upheld the impugned order, consequently dismissing the Revenue's appeal. The judgment was pronounced in the open court on 03.11.2022.