2023 (4) TMI 1018 - AT - Service Tax

Utilization of the Cenvat credit for payment of a part amount out of the total due amount of Service tax to be paid - Department alleged that since the appellant has availed Cenvat Credit, as such they were not eligible for claiming 75% abatement of value of service under Notification No.01/2006-ST dated 01.03.2006, as amended - credit subsequently reversed and was paid in cash subsequently and filed revised return was also within prescribed time period - intent to give an opportunity to any assessee to correct a mistake or omission - Rule 7B of Service Tax Rules, 1994 - demand of service tax alongwith interest and penalty. HELD THAT - In the present case there is no dispute about the fact that the appellant though had availed the CENVAT credit while filing the ST- 3 return on 24.04.2011. However, subsequently vide a revised return of 14.06.2011, the credit availed was reversed. The only condition for availing the amount under the Notification No. 1/2006 was the non-availment of CENVAT Credit. There has been a catena of decisions wherein it has been held that reversal is the sufficient compliance of the aforesaid condition of the said Notification. In M/S. PUNJ LLOYD LTD. VERSUS C.C.E. S. T., ROHTAK 2015 (10) TMI 2294 - CESTAT NEW DELHI where it was held that Benefit of Notification No.1/2006-ST granted on final product since reversal of credit on input was done at Tribunals stage. Demand under CICS is untenable as Notification No.25/2007-ST nowhere implies that CICS for construction of public port only is eligible for exemption and private port is not. Appellant received payment for service rendered to joint venture thus contention that services rendered were effect to self is untenable. In Hon ble Allahabad High Court in matter of HELLO MINERALS WATER (P) LTD. VERSUS UNION OF INDIA 2004 (7) TMI 98 - ALLAHABAD HIGH COURT where it was held that petitioner is thus entitled to the benefit of the said Notification No. 15/1994-CE, dated 1-3-2004 and reversal of Modvat credit on the inputs namely PVC granules used in the manufacture of PVC/PP bottles, which have been admittedly reversed by the petitioner, even though after clearance of the final product. The adjudicating authority below has failed to observe the settled proposition of law despite that the decision of Hon ble Apex Court in case of CHANDRAPUR MAGNET WIRES (P) LTD. VERSUS COLLECTOR OF C. EXCISE, NAGPUR 1995 (12) TMI 72 - SUPREME COURT was being cited by the original adjudicating authority - Appeal allowed.

Summary

Issues Involved:
The appeal challenges the order-in-appeal regarding denial of 75% abatement from taxable value due to availing Cenvat Credit and subsequent reversal, leading to a demand of Rs. 23,31,054/- of Service Tax along with interest and penalty.

Issue 1 - Benefit of Abatement:
The main issue is whether the appellant can be denied the benefit of 75% abatement from taxable value under Notification No. 01/2006-ST despite reversing the CENVAT Credit availed earlier.

The Tribunal observed that the appellant had initially availed CENVAT credit but later reversed it in a revised return, meeting the condition of non-availment for the abatement. Various decisions, including the case of Punj Lloyd Limited vs. Commissioner of C. Ex. & ST., Rohtak, supported the view that reversal of credit suffices for availing the benefit of the notification. The judgment of Allahabad High Court in the case of Hello Minerals Water (P) Ltd. vs. Union of India also emphasized that reversal of credit amounts to non-taking of credit, entitling the assessee to the benefit of the notification. The Tribunal held that the denial of the benefit was not sustainable, setting aside the order under challenge and allowing the appeal.

Conclusion:
The Tribunal concluded that the appellant was entitled to the benefit of the 75% abatement from taxable value under Notification No. 01/2006-ST despite initially availing and later reversing the CENVAT Credit. The decision was based on established legal principles and previous judgments supporting the allowance of the benefit in such cases.