2013 (3) TMI 543 - AT - Service Tax

This appeal is related to admissibility of Cenvat Credit on outward freight period prior to 01-04-2008. The appellant made reliance on the case of Commissioner of C.Ex. & S.T., LTU, Bangalore vs. ABB Ltd. 2011 (3) TMI 248 - KARNATAKA HIGH COURT . The Department denied the same and initiated proceeding which is confirmed by lower authority. Both sides challenged the order before ld. Commr.(A). ld. Commr.(A) confirms the amount of demand. Aggrieved by this appellant filed an appeal before Tribunal. Held that - Tribunal find that the demand is not maintainable and made reliance on the above mentioned case of Karnataka High Court and accordingly the impugned order passed by ld.Commissioner(Appeals) is not sustainable. Moreover once the demand itself is not sustainable the penalty is not warranted. The appeal is allowed.

Summary

Issues:
- Application for waiver of pre-deposit of Service Tax
- Availment of CENVAT Credit on outward freight
- Dispute regarding the period January, 2005 to December, 2007
- Applicability of the decision of Hon'ble High Court of Karnataka at Bangalore
- Power of Commissioner(Appeals) to remand the case
- Settlement of the issue by the High Court
- Validity of demand and penalty

Analysis:
The applicant filed an application seeking waiver of pre-deposit of Service Tax amounting to Rs.6,17,051. The main contention revolved around the availment of CENVAT Credit on outward freight for the period from January, 2005 to December, 2007. It was argued that this issue was addressed in a decision by the Hon'ble High Court of Karnataka at Bangalore in a specific case. After hearing both sides, it was determined that the appeal could be resolved at that stage, leading to the waiver of the pre-deposit requirement for further proceedings.

The facts of the case revealed that the appellant had availed CENVAT Credit on outward freight during the specified period, which was challenged by the department. The lower adjudicating authority confirmed the demand and imposed a penalty. Subsequent appeals were made by both parties, resulting in the dismissal of the appellant's appeal and remand of the penalty aspect by the ld. Commissioner(Appeals). Notably, the department did not contest the remand decision. The appellant's argument relied on the settled issue by the Hon'ble High Court of Karnataka, emphasizing the inadmissibility of the Commissioner(Appeals) to remand the case.

The judgment highlighted the settled stance by the Hon'ble High Court of Karnataka regarding the CENVAT Credit on outward freight for the period before April 1, 2008. It was emphasized that the demand was not sustainable, leading to the setting aside of the ld. Commissioner(Appeals)'s order. Referring to a Supreme Court decision, it was concluded that once the demand was deemed unsustainable, the penalty was unwarranted. Consequently, the appeal was allowed, and the stay petition was disposed of accordingly.