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2013 (2) TMI 459 - AT - Service TaxCENVAT credit Whether Cenvat credit can be used towards payment of dues arising as a result of adjudication order The appellant is engaged in providing photography services. The Service Tax, Interest and penalty has been demanded, on the ground that the appellant had not paid the full amount due - The appellant had actually debited the CENVAT Credit. But, the Department, while working out the Service Tax amount due, has not taken this into account. Held that - Debit of CENVAT credit made by the appellant has to be accepted by the department in view of the fact that the same has not been challenged and according to the law, in the self assessment procedure, the assessee is free to utilize the credit and if the department has any problem, department can take action. Reversal of CENVAT credit made by the appellant has to be taken as payment towards service tax and other dues confirmed against the appellant legal position is that appellant is entitled to avail credit on his own in accordance with the provisions of the CENVAT Credit Rules, 2004. The details of the credit are required to be furnished in the statutory returns. It is upto the assessee to utilize the credit for payment of tax and there is no such requirement that the same requires approval of any authority The appeal allowed with consequential relief.
Issues:
Service Tax demand for the period from 16-8-2001 to 31-12-2005, non-consideration of CENVAT credit in the calculation of Service Tax amount due, rejection of claim for adjustment of CENVAT credit towards payment of dues, discrepancy between the original adjudicating authority and Commissioner (Appeals) regarding the treatment of CENVAT credit, determination of amount paid towards dues, consequential relief, and payment of interest within the specified timeline. Analysis: The appellant, engaged in photography services, faced a Service Tax demand of Rs. 8,07,610 for the period from 16-8-2001 to 31-12-2005, along with interest and penalty under Section 78 of the Finance Act, 1994. The appellant surrendered the registration certificate on 25-4-2007 after a search of the firm and seizure of records. The appellant, represented by a Chartered Accountant, argued that they could not challenge the demanded amount as the seized records were unavailable, and they only had copies of Service Tax returns. The appellant had debited CENVAT Credit of Rs. 3,79,112, which was not considered in the Service Tax calculation by the Department. The Additional Commissioner observed that the amount of Rs. 5 lakhs paid by the appellant was appropriated. The appellant's claim that the debited CENVAT Credit should be treated as payment was not considered by the authorities. The original adjudicating authority rejected the claim regarding CENVAT credit admissibility, stating that the appellant provided no evidence. The Commissioner (Appeals) clarified that the appellant could avail credit according to the CENVAT Credit Rules, 2004, and utilize it for tax payment without requiring approval. The dispute revolved around whether the CENVAT credit debited by the appellant should be considered as payment towards the dues resulting from the Order-in-Original. The Commissioner (Appeals) implied acceptance of the debit of CENVAT credit by the appellant as a valid payment, as it was not challenged and fell under the self-assessment process. The judgment directed that the amount paid by the appellant, as detailed in a table, should be considered as payment towards the dues. Consequently, the appeal was allowed with consequential relief. The Revenue was instructed to inform the appellant of the interest amount payable, to be paid within 15 days, followed by payment within 15 days by the appellant. This ensured that the service tax, penalty (25% of service tax), and interest were settled within 30 days of the order.
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