Revenue's appeals to reverse input service credit denied under Cenvat Credit Rules

The appeals were filed by the revenue against impugned orders concerning the reversal of input service credit under Rule 3(5) of the Cenvat Credit Rules, 2004. The revenue sought to reverse the input service credit as it was used to procure inputs not utilized in the final product manufacturing. However, the judge, considering a previous Tribunal decision, found no merit in the revenue's argument. Consequently, all three appeals filed by the revenue were rejected, confirming the impugned order.

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Issues:
- Appeal against impugned orders on reversal of input service credit under Rule 3(5) of Cenvat Credit Rules, 2004.

Analysis:
The appeals were filed by the revenue against impugned orders where the order of adjudication was set aside, arguing that under Rule 3(5) of the Cenvat Credit Rules, 2004, there is no provision for reversal of input service credit on inputs cleared "as such." The respondents availed Cenvat Credit on inputs and goods transportation agency service, later clearing the inputs "as such" after reversing the CENVAT credit on the inputs but not on the input service of the goods transport agency. The revenue sought direction for the respondents to reverse the input service credit as it was used to procure inputs not used in the final product manufacturing.

The revenue contended that since the inputs were not consumed in the factory, the credit taken for procuring these inputs should be reversed upon clearance "as such." The lower appellate authority rejected the revenue's claim, citing a previous Tribunal decision in the case of Chitrakoot Steel & Power (P.) Ltd. v. CCE. The Tribunal in that case held that there is no provision to reverse credit of service tax availed in relation to inputs or capital goods when removed from the factory. Rule 14 of the Cenvat Credit Rules, 2004 provides for recovery of wrongly availed credit, but in this case, the credit was taken correctly as per statutory provisions, and there was no provision rendering the credit utilization erroneous.

After considering the impugned order and the previous Tribunal decision, the judge found no merit in the revenue's contention. Therefore, all three appeals filed by the revenue were rejected by confirming the impugned order.

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