Successful Appeal by M/s. Polygenta on Cenvat Credit Disallowance

The appeal by M/s. Polygenta Technologies Ltd. against the disallowance of Cenvat credit, demand of interest, and imposition of penalty was allowed by the Appellate Tribunal CESTAT, Mumbai. The Tribunal found that the appellant paid service tax on a reverse charge basis and availed credit based on the tax paid challan, not a supplementary invoice. As the appellant was not a service provider and paid tax under a different rule, Rule 9(i)(bb) did not apply, leading to the allowance of the appeal. The decision emphasized the correct rule application and the appellant's compliance with tax payment regulations.

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Issues: Disallowance of Cenvat credit, demand of interest, imposition of penalty

In the judgment delivered by the Appellate Tribunal CESTAT, Mumbai, the appellant, M/s. Polygenta Technologies Ltd., appealed against the disallowance of Cenvat credit, demand of interest, and imposition of penalty. The appellant had availed input service credit due to service tax liability under reverse charge after an investigation by DGCEI revealed non-payment of service tax on certain services received from foreign firms. The appellant paid the service tax amount and claimed credit. The Revenue sought to deny the credit under Rule 9(i)(bb) of the Cenvat Credit Rules, which debars credit on supplementary invoices issued due to fraud, suppression, misdeclaration, etc. The appellant argued that their case falls under Rule 9(i)(e) as the service tax was paid under Section 66A of the Finance Act, 1994 on a reverse charge basis without any supplementary invoice being issued. The Tribunal noted that the appellant paid service tax on a reverse charge basis and availed credit based on the challan for the tax paid, not a supplementary invoice. Rule 9(i)(bb) applies to output service providers, while Rule 9(i)(e) applies to those liable to pay service tax under specific clauses of the Service Tax Rules. Since the appellant is not a service provider and pays tax under a different rule, Rule 9(i)(bb) does not apply, and the credit cannot be denied. Thus, the appeal was allowed, emphasizing the correct rule application and the appellant's compliance with the tax payment regulations.

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