2009 (9) TMI 115 - AT - Service Tax

Credit - show cause notice was issued by the Revenue to recover the credit of Service Tax taken by the appellant on the ground that the same was taken after more than one year - appellant had written a letter in Nov. 06 immediately after taking the credit is sufficient for allowing the appeal since the suppression/misdeclaration could not have been invoked in this case - However, it is also noticed that the Tribunals decisions cited by the learned advocate also cover the case and CBEC manual also supports the contention of the learned advocate. Therefore, on merit also, the appellants have a very strong case. appeal is allowed

Issues:
1. Credit of service tax taken by appellant after more than one year.
2. Applicability of time limit for taking credit of service tax.
3. Precedent decisions of the Tribunal regarding time limit for availing credit.
4. Interpretation of CBEC Manual regarding Cenvat credit.
5. Arguments by the appellant and the respondent regarding the time limit for availing credit.
6. Consideration of submissions by both sides by the Tribunal.
7. Comparison of Single Member and Division Bench decisions of the Tribunal.
8. Decision on the appeal and consequential relief to the appellant.

Analysis:

1. The appeal involved the issue of the appellants taking the credit of service tax paid by the job worker in Nov. 2006, even though the service tax had been paid during Jan.'05 to Oct.'05. A show cause notice was issued in Oct.'08 to recover the credit taken by the appellant, along with interest and penalty equal to the service tax credit taken.

2. The Tribunal considered whether there was a time limit for taking the credit of service tax, as argued by the Revenue, and if the credit taken after more than one year was reasonable.

3. The appellant relied on precedent decisions of the Tribunal to support their contention that there is no specific time limit for taking the credit of service tax. These decisions included M/s. Coromandel Fertilizers Ltd. and Tribunal's Order No. A/123/WZB/Ah'bad/06.

4. The Tribunal also examined Para 3.5 of the CBEC Manual, which states that Cenvat credit may be taken immediately upon receipt of the input in the factory, but not taking credit immediately does not deny the benefit. The appellant argued that all transaction details were provided in Nov.'06 when taking credit.

5. The respondent contended that although there was no prescribed time limit for availing credit, it should be taken within a reasonable period. They cited decisions of the Tribunal in support of this argument, including M/s. J.V. Strips Ltd. and CCE, Hyderabad v. M/s. Mould-tek Technologies Ltd.

6. After considering the submissions from both sides, the Tribunal opined that the appellant's immediate letter in Nov.'06 after taking credit was sufficient to rule out suppression/misdeclaration, which is required to invoke extended time limits for issuing show cause notices. The Tribunal found merit in the appellant's case based on the submissions and the Tribunal decisions cited.

7. The Tribunal noted the difference between Single Member and Division Bench decisions of the Tribunal, highlighting that the decisions cited by the appellant were Division Bench decisions, making them more authoritative. The timing of these decisions was also considered in relation to the decision cited by the respondent.

8. Ultimately, the Tribunal allowed the appeal in favor of the appellant, considering that the issue was covered by precedent decisions of the Tribunal and the appellant's prompt communication in Nov.'06. Consequential relief was granted to the appellant in light of the findings.

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