2012 (9) TMI 667 - AT - Service Tax

CENVAT credit of the service tax paid by the appellant on a service imported from abroad. Prior to 18/04/2006, the date w.e.f. which Section 66A of the Finance Act, 1994 was enacted - held that - When the assessee paid duty of excise on their excisable product, they utilized the above credit, which fact was also borne on the relevant returns filed with the Department. Thus the utilization of CENVAT credit was also known to the Department. - Demand is beyond normal period of limitation - Decided in favor of assessee. Revenue argued that availment of such irregular credit came to the knowledge of the department only during the course of audit of the accounts of assessees by the audit party. Had the audit of the accounts of the units not taken place, irregular availment of credit by assessees could not have been detected. - this allegation is clearly untenable.

Summary

Issues:
- Appeal for waiver and stay of amounts adjudged against the appellant.
- Demand of duty and penalty for the period 2004-05 and 2005-06.
- Denial of CENVAT credit on service tax paid on imported service.
- Contestation on grounds of limitation.
- Allegations of suppression of information by the appellant.

Analysis:
1. The appellant filed an application seeking waiver and stay regarding the amounts adjudged against them. After reviewing the records, the Tribunal decided the appeal was fit for summary disposal and proceeded without predeposit.

2. The appeal contested a demand of duty and penalty amounting to Rs.12,65,212/- for the period 2004-05 and 2005-06, arising from the denial of CENVAT credit on service tax paid on an imported service. The Department contended that the appellant was not entitled to avail the credit as the imported service was not considered an input service. The appellant challenged this view based on the period of dispute being prior to the enactment of Section 66A of the Finance Act, 1994.

3. The Tribunal found in favor of the appellant on the ground of limitation. It noted that the appellant had filed returns, paid service tax on the foreign commission agent's services, and utilized the credit for excise duty payment, all of which were known to the Department. The allegation of suppression of information by the appellant was deemed untenable, leading the Tribunal to hold the entire demand as time-barred. Consequently, the penalty was set aside, and the appeal was allowed.

4. The Tribunal's decision was based on the lack of evidence supporting the Department's claim of deliberate suppression by the appellant. As there was no willful concealment of facts, the demand was considered beyond the normal period of limitation. The appeal was allowed, and the stay application was disposed of accordingly.