Reversal of CENVAT Credit can preserve service tax abatement benefit; prior availment alone is not decisive.

Subsequent reversal of CENVAT credit is treated as having the effect of non-availment of credit, so service tax abatement benefit cannot be denied merely because credit was earlier taken and later reversed. The Tribunal accepted the assessee's legal contention on entitlement to the notification benefit, but remanded the matter only for verification of the factual question whether the credit had actually been reversed. The operative effect is that prior availment alone is not a sufficient basis to refuse the abatement where reversal is claimed.

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Issues: Whether the benefit of the service tax abatement notification could be denied merely because credit had been availed earlier and later reversed, and whether the fact of such reversal required verification.

Analysis: The legal position on the effect of subsequent reversal of credit was treated as settled. Relying on the settled principle that reversal of credit has the effect of non-availment of credit, the Tribunal held that denial of the notification benefit could not rest solely on the earlier availment of credit. However, the Tribunal also noted that the factual aspect of whether the credit had in fact been reversed had not been verified.

Conclusion: The assessee was entitled to succeed on the legal issue, but the matter was remanded to the original adjudicating authority only for verification of the fact of reversal of credit.

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