2015 (7) TMI 466 - AT - Service Tax

Construction Service - Notification No. 1/2006-ST dated 01.03.2006 - Denial of CENVAT Credit - Held that - Appellant have rightly taken credit for the input services received and availed admittedly prior to 01.03.2006 although credit for the same have been taken on 01.04.2006 subsequent to coming into force of Notification No.1/06 following the ruling of the Hon ble High Court of Bombay in the case of Tata Engineering & Locomotive Company Ltd. (2003 (1) TMI 124 - HIGH COURT OF JUDICATURE AT BOMBAY). The intention of the Government is also express that it is not to disallow the CENVAT Credit for the previous period as there is no such specific bar in the subsequent Notification no. 1/2006. This view is further fortified by the view taken by CBEC Circular with respect to brought forward CENVAT Credit under Rule 6 sub Rule 3 when the disability of utilisation of 20% was removed. - Decided in favour of assessee.

Summary

Issues:
Disallowed CENVAT credit on input services availed by the appellant during a specific period due to a notification affecting the construction service abatement.

Analysis:
The appellant, engaged in civil construction, had CENVAT credit disallowed for input services during 01.04.2006 to 30.09.2006 as per a Notification No. 1/2006-ST. The appellant had availed abatement under a prior notification, but the rules changed with the new notification disallowing CENVAT credit on input services as well. The Revenue alleged the appellant should have availed credit before the new rule but did so after it. A show-cause notice was issued, leading to the disallowance of credit and imposition of penalties.

The appellant argued that Rule 3 of the CENVAT Credit Rules, 2004 allowed credit for services received after 10.09.2004, and they utilized the credit legally accrued under the previous notification. The Additional Commissioner upheld the disallowance and imposed penalties. The Commissioner (Appeals) confirmed this decision, leading to the appellant's appeal before the Tribunal.

The appellant contended that they rightfully took credit post the new notification as per the rules and the Revenue's interpretation was incorrect. They also cited a CBEC Circular supporting their position on credit utilization rights. Additionally, they referenced a Bombay High Court ruling regarding unutilized credits in a similar context.

The Tribunal, considering the arguments, ruled in favor of the appellant. They held that the appellant correctly availed credit for input services pre-01.03.2006 even though the credit was booked post the new notification. The Tribunal cited the Bombay High Court ruling and CBEC Circular to support their decision, emphasizing the absence of a specific bar in the subsequent notification against allowing CENVAT credit for the previous period.

In conclusion, the Tribunal allowed the appeal, setting aside the impugned order and granting the appellant consequential benefits. The decision was made in favor of the appellant based on the merits of the case, without delving into the question of limitation.