Tribunal upholds Cenvat credit restriction, penalties for non-disclosure.

The Tribunal upheld the restriction of Cenvat credit to 35% for the appellant, directing the recalculating of liability for each return period. The Tribunal found the appellant's non-disclosure of the exempted nature of the service in their returns constituted wilful suppression, justifying penalties under Sections 76 and 78. The penalties were confirmed, emphasizing that false declarations in returns regarding service tax payment warranted penalties. Interest under Section 75 was deemed payable on the tax due. The appeal was allowed only to the extent of recalculating Cenvat credit liability and confirming the penalties imposed.

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Issues:
1. Whether the service provided by the appellant as a visiting network service provider shall be treated as exempt service and Cenvat credit limited to 35%Rs.
2. Whether non-disclosure of such fact in the return shall amount to suppressionRs.

Analysis:
1. The appellant argued that the issue of taxability for visiting network service providers was settled by a previous Tribunal decision. They contended that Cenvat credit admissibility should be determined for each return period and not for the whole year's tax liability. The appellant claimed that the proceedings were time-barred as they had disclosed the working method to the department in their returns. They relied on circulars to support their position that roaming telecom service is not taxable in the hands of visiting network service providers. On the other hand, the Revenue argued that the consideration received for the appellant's service was in relation to taxable telecom service, even though it was exempted from service tax. The Revenue contended that the appellant had not disclosed the exempted nature of the service in their returns, depriving the Revenue of legitimate dues. The Revenue asserted that this non-disclosure amounted to suppression under Section 73(1) and justified the levy of penalties.

2. The Tribunal acknowledged that the restriction of Cenvat credit to 35% was settled in a previous decision. They directed the recalculating of the appellant's liability to limit Cenvat credit to 35% for each return period. The Tribunal limited the demand in adjudication to this extent. Regarding the levy of penalties, the Tribunal found that the appellant's failure to disclose the exempted nature of the service in their returns constituted wilful suppression. The Tribunal confirmed the penalty under Section 76 and directed a review of the penalty under Section 78 based on the re-computed tax payable. The Tribunal emphasized that false declarations in returns regarding payment of service tax correctly called for penalties, and interest under Section 75 was deemed payable on the tax due. The appeal was allowed only to the extent of recalculating the liability for Cenvat credit and confirming the penalties imposed.

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