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TMI Blog2012 (10) TMI 765X X X X Extracts X X X X X X X X Extracts X X X X ..... nefit to either side. The defence regarding the admissibility of CENVAT Credit canvassed by the assessee was considered by adjudicating authority and while doing so, the admissibility/in-admissibility of CENVAT Credit to the respondent was considered. Therefore, it cannot be said that the principles of natural justice for denying the CENVAT Credit available to the respondent did not become available to them in the absence of Show Cause Notice after filing of ST-3 returns with regard to the CENVAT Credit. If a Show Cause Notice was to be issued and separate proceedings were to be initiated, the original adjudicating authority would not have allowed the appropriation and would not have allowed the benefit of credit itself since it would have been the subject matter of another litigation and thereby the respondent would have been required to make payment in cash and later on file refund claim resulting in further litigation regarding unjust enrichment and other aspects. Thus the arguments advanced that a separate Show Cause Notice should have been issued for dis-allowing the CENVAT Credit after the returns were filed, have no merit. Once the claim that the CENVAT Credit was availab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthority allowed the benefit of CENVAT Credit of capital goods prior to 10.09.2004 also and the Revenue is in appeal. Cross objections have been filed by the respondent. 2. Supporting the Revenue s appeal, the ld.A.R. submitted that during the relevant period, according to the provisions of Rule 11 of CENVAT Credit Rules, 2004/2002, and Service Tax Credit Rules, 2002, CENVAT Credit of duty on capital goods was not available prior to 10.09.2004 and the Commissioner has erred in allowing the credit by considering the provisions of Rule 11 of CENVAT Credit Rules alone without considering the provisions of Rule 3 of Service Tax Credit Rules, 2002. 3. Ld.Counsel of the respondent submits that the Department cannot reject the claim for CENVAT Credit since the respondent had filed the ST3 returns for the relevant period in November 2007 and in the returns, they had shown the availment of CENVAT Credit, utilization of same for payment of Service Tax. Since the returns were filed late and after issue of Show Cause Notice and the returns shows the credit and debit both, the Revenue cannot claim that there was suppression on their part and further the credit availed by them should have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reunder:- Rule 11: Transitional provision (1) Any amount of credit earned by a manufacturer under CENVAT Credit Rules, 2002, as they existed prior to 10th day of September, 2004 or by a provider of output service under the Service Tax Credit Rules, 2002, as they existed prior to the 10th day of September, 2004, and remaining unutilized on that day shall be allowed as CENVAT Credit to such manufacturer or provider of output service unless these rules, and be allowed to be utilized in accordance with these rules. 5. However, he has failed to consider the provisions of Rule 3 of Service Tax Credit Rules, which is reproduced here under:- 3. Service Tax Credit: (1) An output service provider shall be allowed to take credit (herein referred to as Service Tax Credit) of the Service Tax paid on such input services, which fall in the same category of taxable service as that of output service, for which invoice/bill is issued on or after sixteenth day of August 2002. 6. Therefore, the submission of ld.A.R. that during the relevant period i.e. prior to 10.09.2004, credit could have been taken on the Service Tax paid on input services will fall under the same category of taxable se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceedings were to be initiated, the original adjudicating authority would not have allowed the appropriation and would not have allowed the benefit of credit itself since it would have been the subject matter of another litigation and thereby the respondent would have been required to make payment in cash and later on file refund claim resulting in further litigation regarding unjust enrichment and other aspects. Under these circumstances, I do not find the arguments advanced that a separate Show Cause Notice should have been issued for dis-allowing the CENVAT Credit after the returns were filed, have any merit. 9. The next question that arises is whether the respondent is liable to penalty under Section 78 or not. No doubt, no appeal has been filed against confirmation/imposition of penalty by the respondent. According to Section 86 (4) of Finance Act, 1994, the cross objection filed by the respondent has to be treated as an appeal. After going through the memorandum or cross objection, I am inclined to agree with the submissions made by the ld.Counsel that the claim of the respondent that there was no intention to evade duty since they were eligible for credit of duty paid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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