2010 (1) TMI 308 - AT - Service Tax

Removal of Inputs reversal of cenvat credit credit of excise duty was reversed but credit of service tax paid on GTA service not reversed Held that - Commissioner (Appeals) has relied on his earlier decisions in respect of M/s. Bansal Alloys & Metals Pvt. Ltd. and M/s. J.S. Khalsa Steel P Ltd. while passing the impugned order. Both these decisions have been set aside by the Tribunal as mentioned above holding that in such a situation in the absence of express provisions for reversing the credit of Service tax attributable to input services associated with the inputs, the question of reversal of credit of Service tax did not arise. It has not been shown that the said orders of the Tribunal have been appealed against and that any stay has been obtained. service tax credit is not required to be reversed

Summary

Issues:
1. Reversal of Cenvat credit on inputs after removal.
2. Applicability of Rule 3(5) of the Cenvat Credit Rules, 2004.
3. Recovery of credit amount and penalty imposition.
4. Appeal against the order of Commissioner (Appeals).
5. Interpretation of reversing credit of Service tax on input services.
6. Comparison with earlier Tribunal decisions.
7. Decision on appeal and consequential relief.

Analysis:
The appeal before the Appellate Tribunal CESTAT, Mumbai involved the issue of reversal of Cenvat credit on inputs after their removal, as per Rule 3(5) of the Cenvat Credit Rules, 2004. The original authority had ordered recovery of credit amounting to Rs. 1,05,708/- along with interest and imposed an equal amount as a penalty under Rule 15 of the Cenvat Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944. The Commissioner (Appeals) upheld this decision based on earlier rulings in similar cases.

During the hearing, the appellant argued that previous decisions related to identical issues had been set aside by the Tribunal, seeking a similar outcome in the present case. The appellant referenced Tribunal orders in cases involving M/s. Bansal Alloys & Metals Pvt. Ltd. and M/s. J.S. Khalsa Steel Pvt. Ltd., where the Tribunal had ruled against the reversal of credit of Service tax attributable to input services associated with the inputs.

The Tribunal carefully considered the submissions from both sides and noted that the Commissioner (Appeals) had relied on his earlier decisions, which had been overturned by the Tribunal in similar cases. The Tribunal highlighted that in the absence of express provisions for reversing the credit of Service tax on input services, the question of such reversal did not arise. It was also noted that there was no evidence of appeals against the Tribunal's decisions or any stay obtained.

Ultimately, the Tribunal allowed the appeal, providing consequential relief as per the law. This decision was based on the precedent set by the Tribunal in similar cases where the reversal of credit of Service tax on input services was not required in the absence of specific provisions mandating such action.