2017 (11) TMI 256 - AT - Service Tax

CENVAT credit - excess cenvat credit, over and above the prescribed limit of 20% utilized by the appellant - Held that - a perusal of Rule 6(3)(c) indicates that there is no such restriction that 20% credit earned should be utilized within a particular period - the decision in the case of M/s. C.L. Educate Versus Commissioner of Service Tax, Delhi 2015 (10) TMI 2544 - CESTAT NEW DELHI , relied upon, where it was held that There are no specific restrictions or prohibitions contained in Rule 6 of the Cenvat Rules, providing for reversal of cenvat credit on monthly/periodic basis - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Utilization of CENVAT credit exceeding 20% for the months of April and May 2005.
2. Adjudication authority's order confirming recovery of alleged excess credit utilization.
3. Interpretation of Rule 6(3) of the CENVAT Credit Rules.
4. Applicability of case laws supporting the appellant's position.
5. Appeal against the impugned order.

Analysis:
1. The appellants provided both taxable and exempted services from September 2004 to March 2005 without maintaining separate accounts for CENVAT credit. The Department alleged excess utilization of credit amounting to ?58,06,851 for April and May 2005, beyond the permissible 20% limit. The appellants disputed this claim, stating they utilized the credit earned earlier for tax liability in the subsequent months.

2. During the hearing, the appellants' counsel argued that they did not exceed the 20% credit utilization limit for September 2004 to March 2005. They supported their claim with case laws such as Vijayanand Roadlines Ltd., Idea Cellular Ltd., and M/s. C.L. Educate. The counsel presented a detailed chart showing the eligible CENVAT credit earned and utilized for April and May 2005.

3. The adjudicating authority initially acknowledged the appellants' right to utilize CENVAT credit up to 20% and that unutilized credits would not lapse. However, the authority later cited Rule 6(3) of the CENVAT Credit Rules to restrict the utilization of 20% credit within a specific period. The Tribunal disagreed with this interpretation, noting that Rule 6(3)(c) did not impose such a restriction. The Tribunal found no merit in the adjudicating authority's decision.

4. The Tribunal reviewed the case laws cited by the appellants' counsel and found them supportive of the appellant's position. The case laws emphasized the permissible utilization of CENVAT credit without time constraints, aligning with the appellants' argument. Consequently, the Tribunal concluded that the impugned order could not be sustained and set it aside, allowing the appeal with any consequential relief as per law.

5. Additionally, a miscellaneous application was filed by the Revenue to change the cause title due to the introduction of GST. The Tribunal granted the application, directing the Registry to amend the cause title accordingly. The judgment was dictated and pronounced in open court, concluding the proceedings.