Appellate Tribunal upholds denial of PSU unit's Cenvat credit recovery appeal

The Appellate Tribunal CESTAT Bangalore upheld the Commissioner's decision to deny the appellant, a PSU unit, the recovery of Rs. 2,27,02,809/- in Cenvat credit due to the lack of proper documentation for certain services. The appellant's offer to pre-deposit 50% of the tax amount was declined, and the Tribunal ordered the full pre-deposit within three months. Compliance would result in the waiver of interest and penalty, with recovery stayed until appeal disposal. Failure to comply would lead to appeal dismissal, with a compliance report due by 2nd December 2008.

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Issues: Recovery of Cenvat credit wrongly availed without proper documentation.

In this judgment by the Appellate Tribunal CESTAT Bangalore, the appellant, a PSU unit, was proceeded against by the Revenue for the recovery of Rs. 5,55,31,646/- being the Cenvat credit availed wrongly without producing necessary documents. The Commissioner examined the details and allowed a credit of Rs. 3,28,28,837/- based on sample copies of duty paid invoices. However, for certain services like IT services, Advertising fees, Traveling expenses, etc., the appellant failed to produce invoices for claiming input credit. The Commissioner denied credit of Rs. 2,27,02,809/- in the absence of evidence. The appellant's counsel argued that the bank had maintained necessary registers but had not produced all invoices, leading to the denial of credit. The appellant offered to pre-deposit 50% of the tax amount, but the Bench declined to grant a waiver of pre-deposit.

The learned SDR opposed the appellant's prayer, stating that despite ample time granted by the Tribunal, no evidence was produced to prove payment of service tax for availing input service credit. The SDR argued that since no supporting documents were provided, the entire amount should be pre-deposited. The Tribunal, after considering both sides' submissions, agreed with the SDR's contention. It noted that the appellant failed to produce any evidence to satisfy the Commissioner regarding the input service credit for various items. While the Commissioner allowed credit based on sample invoices, the lack of evidence led to the denial of credit. The Tribunal ordered the appellant to pre-deposit the entire service tax amount of Rs. 2,27,02,809/- within three months. Upon compliance, the pre-deposit of interest and penalty would be waived, and recovery stayed until the appeal's disposal. Failure to comply would result in the dismissal of the appeal, with a compliance report due on 2nd December 2008.

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