2017 (10) TMI 274 - AT - Central Excise

CENVAT credit - sub-contract - denial on the ground that the main contractor has discharged the service tax liability - Held that - it is seen from the records that the appellant has produced various documents regarding declaration from the contractor for not availing CENVAT credit, income statement to prove that remittances were made to the contactor directly, service tax payment of challans of sub-contractor, agreement between appellant and contractors, etc. for the first time before the Tribunal - if these documents would have been produced before the lower authorities they would have come to a conclusion depending upon the documents - matter on remand. CENVAT credit - various penal charges paid towards the purchase of land - Held that - the documents indicate that the service provider has discharged the service tax liability on them. He was not supposed to do so. It is settled law that if the documents indicate discharge of tax/duty liability and there is no dispute as to the fact that the said services are rendered to the recipient - credit remains allowed. Appeal allowed in part and part matter on remand.

Summary

Issues:
Confirmation of demand of ineligible CENVAT credit, denial of CENVAT credit on sub-contractor invoices, denial of CENVAT credit on service tax paid on penal charges, confusion regarding CENVAT credit on sub-contractor invoices.

Confirmation of demand of ineligible CENVAT credit:
The appeal was against the confirmation of demand of ineligible CENVAT credit to the appellant. The adjudicating authority disallowed the CENVAT credit availed by the appellant on sub-contractor invoices, stating that the main contractor had already discharged the service tax liability. Additionally, the CENVAT credit availed on service tax paid on penal charges for land purchase was also denied. The adjudicating authority found that the appellant failed to justify the refund claim for service tax paid by sub-contractors and that the services rendered were not taxable. The Tribunal remanded the issue back to the adjudicating authority for reconsideration, emphasizing the need for principles of natural justice to be followed.

Denial of CENVAT credit on sub-contractor invoices:
Regarding the denial of CENVAT credit amounting to ?32,48,013 on sub-contractor invoices, the appellant submitted various documents before the Tribunal for the first time, including declarations from the contractor, income statements, service tax payment challans, and agreements. The Tribunal noted that if these documents were presented before the lower authorities, a conclusion might have been reached based on them. The matter was remanded back to the adjudicating authority for a fresh consideration while keeping all issues open, without expressing any opinion on the case's merits.

Denial of CENVAT credit on service tax paid on penal charges:
The denial of CENVAT credit of ?13,23,320 on service tax paid for delayed penal charges related to land purchase was examined. The documents indicated that the service provider had already paid the service tax, which was not required. Citing established legal precedents in favor of the appellant, the Tribunal set aside the impugned order on this issue.

Confusion regarding CENVAT credit on sub-contractor invoices:
A confusion arose regarding the CENVAT credit availed on sub-contractor invoices amounting to ?11,57,569. The Chartered Accountant claimed that the demands were dropped, while the Revenue contended otherwise. The Tribunal observed the confusion in the records and remitted the issue back to the adjudicating authority for a fresh consideration, without expressing any opinion on the matter's merits. The appeal was disposed of, emphasizing the need for the adjudicating authority to follow principles of natural justice in reaching a conclusion.