2015 (12) TMI 490 - AT - Service Tax

Denial of abatement claim - Construction services - benefit of abatement of 67% - Assessee had also availed the benefit of CENVAT Credit - Held that - Appellants availed the CENVAT Credit of ₹ 22,981.00 and also availed the abatement under Notification No.1/2006-ST, dt.01.03.2006. There is no dispute on the fact that upon detection, of the mistake, the Appellant reversed the credit. The Joint Commissioner (Preventive) Vadodara dropped the proceedings. - Assessee has necessarily to comply with the conditions of notification. It is also observed that reversal of CENVAT Credit does not absolve from violation of the conditions of notification. We find that this issue is no more res integra in view of the decision of Hon ble Supreme Court in the case of Chandrapur Magnet Wires (P) Ltd Vs CCE Nagpur - 1995 (12) TMI 72 - SUPREME COURT OF INDIA . The Tribunal in the case of Leotronics Scales Pvt.Ltd. Vs CCE Chandigarh - 2015 (4) TMI 128 - CESTAT NEW DELHI , after following the decision of Hon ble Supreme Court, allowed the appeal on this issue. - present case is squarely covered by the decision of Hon ble Supreme Court and the Tribunal. - Impugned order is set aside - Decided in favour of assessee.

Summary

Issues:
1. Benefit of abatement under Notification No.2/2006-ST.
2. Availment of CENVAT Credit and its reversal.
3. Commissioner's decision to confirm Service Tax demand and penalty imposition.
4. Compliance with conditions of notification and reversal of CENVAT Credit.

Analysis:
1. The case involved the Appellants engaged in providing 'Construction services' availing abatement under Notification No.2/2006-ST. A Show Cause Notice was issued proposing to deny abatement due to availing CENVAT Credit, leading to a demand of Service Tax of Rs. 9,58,749.00. The Appellants claimed they reversed the CENVAT Credit of Rs. 22,981.00 due to a mistake of law.

2. The Adjudicating authority dropped the proceedings, but the Commissioner set aside the order, confirming the Service Tax demand and imposing a penalty equal to the tax amount. The Appellants had availed CENVAT Credit and abatement under Notification No.1/2006-ST. The Joint Commissioner dropped the proceedings upon the Appellants' reversal of credit.

3. The Commissioner observed that compliance with notification conditions was necessary, and reversal of CENVAT Credit did not absolve from violating notification conditions. Referring to legal precedents like Chandrapur Magnet Wires case, the Tribunal allowed the appeal, emphasizing strict compliance with notification conditions for availing benefits.

4. The Tribunal found the case similar to Chandrapur Magnet Wires case and set aside the Service Tax demand and penalties, citing compliance with legal provisions. The Appellants' payment of interest on the availed credit from the date of availment to reversal was considered in line with legal principles.

In conclusion, the Tribunal set aside the Commissioner's order and reinstated the Joint Commissioner's decision, allowing the Appellant's appeal based on compliance with notification conditions and reversal of CENVAT Credit.