2012 (12) TMI 435 - AT - Central Excise

Appellant entitled to Cenvat credit for Service Tax paid and recovered, appeal allowed

RATHI BARS LTD. Versus COMMISSIONER OF CENTRAL EXCISE, JAIPUR-I

RATHI BARS LTD. Versus COMMISSIONER OF CENTRAL EXCISE, JAIPUR-I - 2012 (283) E.L.T. 565 (Tri. - Del.) , 2014 (34) S.T.R. 799 (Tri. - Del.) Issues:1. Entitlement to Cenvat credit of Service Tax paid by M/s. Reliance Industries but recovered from the appellant.Analysis:The dispute in the present appeal revolves around the appellant's entitlement to Cenvat credit of Service Tax initially paid by M/s. Reliance Industries but later recovered from the appellant. The issue is clarified by Board's Circular F.No. 137/85/2007-CX.4, No. 97/8/2007, which states that the consignee can take credit of the service tax paid on input services, regardless of whether it was paid by the consignee, consignor, or the Goods Transport Agency. The only condition is that the consignee must be a manufacturer of excisable goods or a provider of taxable service, and the service must qualify as an 'input service.' In the case of inward transportation of inputs or capital goods, the service tax paid on it would be eligible as credit to the receiver if they meet the specified criteria.When the circular was presented before the Commissioner (Appeals), it was observed that the adjudicating authority had already discussed the appellant's arguments in detail and decided not to accept them. However, the appellate authority merely endorsed the view of the adjudicating authority without considering the circular. This lack of discussion on the circular indicates a non-application of mind by the Commissioner (Appeals) and a rush to reject the appeal, leading to a denial of justice to the assessee. The Commissioner (Appeals) was expected to address the circular and provide reasons for not following it.Despite the lack of proper consideration by the appellate authority, the issue is found to be covered by the Board's Circular. Therefore, there is no reason to instruct the appellant to deposit part of the dues, and the stay petition is allowed. The appeal itself is taken up for final disposal, where it is revealed that the freight and Service Tax paid by M/s. Reliance Industries on behalf of the appellant is reimbursable and that M/s. Reliance Industries has not taken Cenvat credit of the Service Tax. In line with the Circular clarifying the issue, the confirmation of Service Tax against the appellant is deemed unsustainable. Consequently, the impugned orders are set aside, and the appeal is allowed with consequential relief to the appellants.