2019 (7) TMI 259 - AT - Service Tax

CENVAT Credit - capital goods - whether the credit of duty paid on the capital goods is admissible to the Appellants and whether the service tax to the extent of utilisation of said credit is recoverable from the appellants? - HELD THAT - None of these submissions have been recorded in the impugned order - It is not clear whether any such submissions have been made by the Appellant during the course of hearing. Even, if it is assumed that these submissions were not raised earlier, then also learned Counsel for the Appellant is entitle to raise them at this stage since these are legal submissions. The matter should be remanded back to the learned commissioner to decide it afresh after taking into consideration - Appeal allowed by way of remand.

Summary

Issues:
1. Admissibility of credit of duty paid on capital goods to the Appellants.
2. Recoverability of service tax concerning the utilization of said credit.

Analysis:
The main issue in this case pertains to the admissibility of the credit of duty paid on capital goods to the Appellants and the recoverability of service tax based on the utilization of said credit. The Appellant contended that the Commissioner erred in rejecting the Cenvat Credit of &8377; 6.42 lacs for a hydraulic excavator. The Appellant argued that Rule 6(4) of the Cenvat Credit Rules, 2004, disallows credit on capital goods only when they are exclusively used for exempted goods or services. The Appellant highlighted that if the use is partly for dutiable products/services and partly for exempted ones, Rule 6(4) does not apply, citing relevant High Court judgments. Additionally, credit denial for a screen with a vibrating grid was disputed, asserting that availing credit does not equate to availing it under the exemption. The Appellant sought a fresh consideration of these legal arguments.

The Tribunal observed that the impugned order did not address the Appellant's legal submissions, raising doubts about whether these were presented during the proceedings. Despite this, the Tribunal acknowledged the Appellant's right to raise legal arguments at any stage, especially if they were not previously discussed. In the interest of justice and adherence to natural justice principles, the Tribunal decided to remand the matter back to the Commissioner for a fresh decision. The Commissioner was directed to consider the Appellant's submissions, provide a reasonable opportunity for a hearing, and ensure all legal aspects are adequately addressed. The Tribunal allowed additional submissions by the Appellants during the rehearing process.

In conclusion, the Tribunal allowed the Appeal by remanding the case back to the Commissioner for a fresh decision, emphasizing the importance of considering the Appellant's legal arguments and ensuring procedural fairness in the proceedings.