2016 (12) TMI 598 - AT - Service Tax

Tribunal permits use of pre-existing CENVAT credit for new services

The Tribunal allowed the appeal by M/s Lemon Tree Hotels Pvt. Ltd., permitting the utilization of pre-existing CENVAT credit for newly introduced services ... Denial of CENVAT credit utilisation - benefit of abatement under N/N. 1/2006-ST dated 1.3.2006 was availed - Held that: - I find that identical issue has been decided by the Tribunal in the case of Archivista Engineering Projects Pvt. Ltd. [2015 (7) TMI 466 - CESTAT MUMBAI], where it was held that Appellant have rightly taken credit for the input services received and availed admittedly prior to 01.03.2006 although credit for the same have been taken on 01.04.2006, subsequent to coming into force of N/N.1/06, following the ruling of the Hon'ble High Court of Bombay in the case of Tata Engineering & Locomotive Company Ltd. (2003 (1) TMI 124 - HIGH COURT OF JUDICATURE AT BOMBAY). The intention of the Government is also express, that it is not to disallow the CENVAT Credit for the previous period as there is no such specific bar in the subsequent N/n. 1/2006. This view is further fortified by the view taken by CBEC Circular with respect to brought forward CENVAT Credit under Rule 6 sub Rule 3 when the disability of utilisation of 20% was removed. CENVAT credit utilisation justified - appeal allowed - decided in favor of appellant-assessee. Issues:1. Availing CENVAT Credit on services after registering for new services.2. Utilization of existing credit for payment of duty on newly introduced services.3. Denial of credit under Notification No. 1/2006-ST dated 1.3.2006.4. Applicability of previous Tribunal decisions on the current case.5. Interpretation of conditions for availing abatement benefits under specific notifications.Analysis:1. The appellant, M/s Lemon Tree Hotels Pvt. Ltd., registered for Short Term Accommodation and Restaurant Services from 1.5.2011, previously availing CENVAT Credit for other services. They utilized existing credit for newly introduced services under Notification No. 1/2006-ST dated 1.3.2006, which prohibits availing CENVAT Credit. A notice was issued to deny this credit, leading to an appeal before the Tribunal.2. The appellant argued citing settled decisions like Archivista Engineering Projects Pvt. Ltd. and others, supporting their right to utilize pre-existing credit for services introduced post-Notification No. 1/2006-ST. The AR relied on the impugned order and the Tribunal's decision in the case of Afcon Infrastructure Ltd.3. The Tribunal referred to previous judgments, especially Archivista Engineering Projects Pvt. Ltd., where it was held that taking credit for input services received before 1-3-2006, even if utilized after the notification, was permissible. The Tribunal also cited Bharat Heavy Electricals Ltd., emphasizing that utilizing accumulated CENVAT credit for service tax liability is allowed as long as no new credit is taken for the specific case/contract.4. The Tribunal found the issues in the current case were covered by the decisions in Archivista Engineering Projects Pvt. Ltd. and Bharat Heavy Electricals Ltd., setting aside the impugned order and allowing the appeal based on the interpretation of the previous judgments.5. The Tribunal distinguished the facts of the current case from Afcon Infrastructure Ltd., ruling in favor of the appellant based on the principles established in the earlier decisions. The appeal was allowed, relying on the precedents mentioned, and the impugned order was set aside.This detailed analysis of the judgment highlights the key issues, legal interpretations, and precedents relied upon by the Tribunal in arriving at its decision.