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2018 (10) TMI 394 - AT - Central ExciseCENVAT Credit on retained amount - credit of service tax paid on input services - certain percentage of the stipulated payment was withheld by the respondent on account of the performance guarantee - whether the said retention prohibits the respondent from taking the Cenvat Credit in accordance of Rule 4 (7) of Cenvat Credit as is alleged by the Department? Held that - Rule 4 (7) of CCR stands amended w.e.f. 1st April, 2011 and after the said amendment taking of Cenvat Credit is not linked with the payment of invoice to the service provider but it is linked with the invoice/bill/challan of input service - Though the grievance of the Department seems that irrespective, the payment was still to be made within 3 months, but I observe that since the respondent had paid the entire Service Tax on which they were liable for taking the credit i.e. on the amount as mentioned in the Bill/invoice, they were entitled to avail credit. It has already been decided by this Tribunal itself in the case of appellant itself COMMISSIONER OF CENTRAL EXCISE & ST, UDAIPUR VERSUS M/S. HINDUSTAN ZINC LTD. 2018 (7) TMI 522 - CESTAT NEW DELHI , wherein the assessee was held entitled to avail the credit of full Service Tax paid irrespective the amount payable to the service provider has been withheld till the service provider has not changed. The circular No.122/03/2010- ST dated 30th April, 2010 further clarifies the situation that the Service Tax paid is allowed as credit. Credit allowed - appeal dismissed - decided against Revenue.
Issues:
- Allegation of wrongly availing Cenvat Credit of Service Tax paid on goods - Dispute over payment of value of input services within stipulated time - Interpretation of Rule 4(7) of Cenvat Credit Rules - Admissibility of Cenvat Credit despite retention of part payment - Comparison with previous tribunal decisions Analysis: The judgment revolves around the appeal against the Commissioner (Appeals) order regarding the alleged wrongful availing of Cenvat Credit of Service Tax paid on goods by the assessee, a manufacturer of Bulk, lead, and zinc concentrates. The Department contended that the assessee did not make full payment of the value of input services received, retaining part payment of the service provider. Three show cause notices were issued initially, which were adjudicated upon, confirming the demand. The Commissioner (Appeals) allowed the appeal, leading to the current appeal by the Department. The key argument put forth by the Department was that credit can only be allowed when the service recipient makes full payment of the value of input services and Service Tax within the stipulated time. Emphasis was placed on Rule 4(7) of Cenvat Credit Rules, highlighting that payment had not been made within the specified timeframe, thus challenging the order under review. In response, the assessee cited previous tribunal decisions, asserting their entitlement to avail the credit of full Service Tax paid, regardless of any withheld amount until the service provider changes. The assessee relied on specific case laws to support their position, emphasizing that the Department's appeal should be rejected. Upon hearing both parties and examining the records, the tribunal noted that the appellant had indeed paid the entire Service Tax to the contractor. The tribunal analyzed Rule 4(7) of CCR, noting that Cenvat Credit is not linked to payment to the service provider but to the invoice/bill/challan of the input service. The tribunal further referenced a circular clarifying that Service Tax paid is allowed as credit, irrespective of any retained amount. The tribunal found that the original adjudicating authority confirmed the demand based on lack of evidence regarding timely payment of Service Tax. However, it was observed that the payment was made within the stipulated period after project completion, and there was no evidence to suggest non-compliance with Rule 4(7) of CCR. The tribunal also considered previous decisions with similar facts involving the same assessee, ultimately dismissing the Department's appeal based on the admissibility of the credit despite the retention of part payment. In conclusion, the tribunal dismissed the Department's appeal, aligning with previous decisions and emphasizing the admissibility of Cenvat Credit based on the payment of Service Tax, regardless of any retained amount, as long as the service tax paid by the service provider remained unchanged.
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