2024 (4) TMI 674 - AT - Service Tax

CENVAT Credit - non-payment of amount equivalent to 6% on the value of exempted services as required under Rule 6 (3) (i) of Cenvat Credit Rules 2004 - HELD THAT - In the present case it is observed that undisputedly entire Cenvat credit taken/availed by the appellant during the period under dispute whether in respect of taxable service or exempted service have been deposited along with interest well before the issuance of the show cause notices and got appropriated by the adjudicating authorities vide the impugned order. The law in this respect is settled that if credit originally availed is reversed subsequently it would amount to as if not credit has been awaited. Support drawn from the decision of Hon ble Supreme Court in the case of CHANDRAPUR MAGNET WIRES (P) LTD. VERSUS COLLECTOR OF C. EXCISE NAGPUR 1995 (12) TMI 72 - SUPREME COURT . It is observed that the Commissioner (Appeals) has considered the decision of this Tribunal as well as of Hon ble Madras High Court which are based on the aforesaid decision of Hon ble Supreme Court. There is no infirmity in the order under challenge the same is accordingly upheld - Appeal of Revenue is dismissed.

Summary

Issues involved: Service tax demand for non-payment of amount equivalent to 6% on the value of exempted services under Rule 6 (3) (i) of Cenvat Credit Rules, 2004.

The judgment pertains to a Departmental appeal against an Order-in-Appeal setting aside a service tax demand for alleged non-payment of the required amount on exempted services. The demand was based on the appellant's failure to maintain a separate account for input services used for exempted services, as per Rule 6 of the Cenvat Credit Rules, 2004. The original authority confirmed the demand, which was subsequently appealed by the assessee and allowed by the Commissioner (Appeals), leading to the Department's appeal before the Tribunal.

During the proceedings, the Authorized Representative for the Department acknowledged that the issue had been decided in favor of the Assessee-Respondent in their own case. The Department argued that a previous decision of the Hon'ble High Court of Bombay had been wrongly ignored. On the other hand, the Respondent-Assessee's counsel highlighted that in previous cases, demands for similar issues had been settled or set aside by the Department itself, indicating that the present appeal for the recovery of the amount for a specific period should be dismissed based on judicial discipline.

The Tribunal observed that the appellant had deposited the entire Cenvat credit, whether for taxable or exempted services, before the issuance of show cause notices, which had been appropriated by the authorities. Citing legal precedent, including a decision of the Hon'ble Supreme Court, the Tribunal emphasized that if credit originally availed is reversed subsequently, it would be as if no credit had been availed. The Tribunal also noted that the Commissioner (Appeals) had considered relevant decisions of the Tribunal and the Hon'ble Madras High Court based on the Supreme Court's decision.

In light of the above discussion and the settled legal position, including previous Tribunal decisions, the Tribunal upheld the order under challenge, dismissing the Department's appeal.