2017 (3) TMI 621 - AT - Service Tax

Abatement of duty - N/N. 1/2006-ST - mandap keeper service - eligibility of CENVAT credit, when the assessee is availing abatement of duty - Held that - the appellant is eligible for abated rate of duty in terms of N/N. 1/2006-ST as they reversed the entire Cenvat credit availed during the material time along with applicable interest - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Applicability of Notification No. 01/2006-ST for abatement of Service Tax on Mandap Keeper services
- Availment of Cenvat credit by the appellant
- Reversal of Cenvat credit by the appellant
- Eligibility for abatement under Notification No. 01/2006-ST after reversal of Cenvat credit

Analysis:

The case involves appeals against Orders-in-Appeal regarding the appellant's entitlement to abatement under Notification No. 01/2006-ST for providing services like Mandap Keeper, Beauty Parlour, Dry cleaning, Health Club, etc. The appellant had availed Cenvat credit for payment of Service Tax on Mandap Keeper services, which was not in line with the conditions of the notification. Demands for Service Tax were raised for two periods, leading to the appeals (ST-1069/2011 and ST/1071/2011).

During the hearing, the appellant's counsel acknowledged the mistake of availing Cenvat credit and informed about the reversal of the entire disputed amounts. The appellant had reversed the Cenvat credit availed along with applicable interest, which led to the argument that their claim for abatement should not be denied.

The Member noted that although the appellant had initially availed Cenvat credit, the reversal of the credit made them eligible for abatement under Notification No. 01/2006-ST. Referring to legal precedents, including the decision of the Hon'ble Supreme Court and the Larger Bench of the Tribunal, it was established that the reversal of Cenvat credit at a later stage could still entitle the appellant to the benefit of the notification. The Member specifically cited cases like Chandrapur Magnet Wires Pvt. Limited vs. CCE and Franco Italian Co. Pvt. Limited vs. CCE, Mumbai, to support this view.

Based on the legal precedents and the appellant's action of reversing the Cenvat credit, the Member concluded that the appellant was indeed eligible for the abated rate of duty as per Notification No. 01/2006-ST. Consequently, the impugned orders denying the benefit of the notification were set aside, and the appeals were allowed in favor of the appellant.

In the final order pronounced on 22.02.2017, the Member confirmed the eligibility of the appellant for the abated rate of duty under the notification following the reversal of the Cenvat credit, as per the legal principles discussed during the hearing.