2019 (6) TMI 901 - AT - Service Tax

Reversal of irregularly availed CENVAT credit without utilising it - HELD THAT - The issue is covered by the judgment of Hon ble Karnataka High Court in the case of Commissioner of Central Excise Service Tax Bangalore Vs. Bill Forge Pvt. Ltd. 2011 (4) TMI 969 - KARNATAKA HIGH COURT where it was held that once the entry was reversed it is as if that the Cenvat credit was not available - demand set aside. CENVAT Credit - common input services which were utilized in dutiable and exempted output services - HELD THAT - Since the Cenvat Credit of 1, 22, 561/- was reversed on 29.12.2015 before utilizing the same transaction does not merit confirmation of amount of 7, 26, 327/- - demand set aside. CENVAT Credit - input services - Security and Legal Services before beginning of provision of output services - HELD THAT - The stand taken by Revenue was that when the said Cenvat Credit was availed the appellant did not provide any output service. Form the provisions of Cenvat Credit Rules 2004 there is no provision where it is mandatory to have output service being provided simultaneously when the input services being received - demand not sustainable. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Availment and reversal of Cenvat Credit without utilization.
2. Availment of Cenvat Credit on Security and Legal Services before provision of output services.

Issue 1 - Availment and reversal of Cenvat Credit without utilization:
The judgment addresses the appellant's availing and subsequent reversal of Cenvat Credit amounting to ?14,43,399/- and ?1,22,561/- without utilizing the same. The Tribunal notes the appellant's argument citing a precedent from the Hon'ble Karnataka High Court in a specific case. The Tribunal accepts the appellant's contention based on the precedent and sets aside the confirmation of demand, interest, and penalty related to the aforementioned Cenvat Credit amounts. Additionally, the judgment highlights another demand concerning the Cenvat Credit of ?1,22,561/-, which was availed but reversed before utilization. The Tribunal rules that this transaction does not warrant the confirmation of the amount of ?7,26,327/-, as it was not utilized, and thus sets aside the confirmation of this amount along with interest and penalty.

Issue 2 - Availment of Cenvat Credit on Security and Legal Services before provision of output services:
The second issue pertains to the appellant's availing of Cenvat Credit amounting to around ?80,000/- on Security and Legal Services before the commencement of providing output services. The Revenue argued that since no output services were provided when the Cenvat Credit was availed, the demand was justified. However, the Tribunal, upon examining the provisions of the Cenvat Credit Rules, 2004, found no mandatory requirement for simultaneous provision of output services when receiving input services. Consequently, the Tribunal deems the confirmation of demand unsustainable and sets aside the impugned order, allowing the appeal and providing consequential relief to the appellant as per the law.

In conclusion, the judgment provides a detailed analysis of the two issues involved, addressing the nuances of Cenvat Credit availment, reversal, and utilization, as well as the timing of availing such credit concerning the provision of output services. The Tribunal's decision in each issue is based on legal interpretations, precedents, and the specific circumstances of the case, ensuring a thorough examination of the relevant legal aspects.