2018 (10) TMI 533 - AT - Central Excise

Successful Appeal: EOU Granted CENVAT Credit on Ineligible Documents

The Tribunal allowed the appeal filed by the appellant, a former 100% EOU, regarding the availment of CENVAT credit on ineligible documents. The Tribunal ... CENVAT credit - ineligible documents - rule 9(1) of CCR - debonding of EOU - service tax on the commission paid to their overseas agencies, covering the period from April 2006 to December 2012 - VCES Scheme - Held that:- The appellants have paid the service tax and have also filed declaration under VCES. Final discharge certificate was issued only on 03.09.2014 and there was no occasion to avail the CENVAT credit prior to receiving of the discharge certificate. They have availed the CENVAT credit only on 30.09.2014. There were correspondence exchanging views between the appellants and their Range authority and they had taken the credit on a later occasion as advised by the Range authorities and in such a factual scenario, there is no occasion to deny the benefit of the credit to which the appellants are lawfully entitled to. Appeal allowed - decided in favor of appellant. Issues Involved:- Availment of CENVAT credit on the basis of ineligible documents- Discharge certificate under VCES for payment of admitted service tax- Availment of CENVAT credit under Rule 4(7) of CCR 2004Analysis:Issue 1: Availment of CENVAT credit on the basis of ineligible documentsThe appellant, a former 100% EOU, applied for de-bonding and was alleged to have availed CENVAT credit on ineligible documents. The adjudicating authority confirmed the demand, and the Ld. Commissioner (Appeals) upheld the decision. However, the Tribunal observed that the appellants had paid the service tax, filed a declaration under VCES, and received the final discharge certificate. The Tribunal noted that the lower authorities failed to consider that the payment of input service tax was to be settled under VCES, and the appellants availed the CENVAT credit only after receiving the discharge certificate. The Tribunal found no reason to deny the appellants the credit they were entitled to lawfully.Issue 2: Discharge certificate under VCES for payment of admitted service taxThe appellant filed a declaration under the VCES scheme and paid the service tax liability in two installments. They obtained a discharge certificate under VCES, acknowledging the payment of admitted service tax. Subsequently, they took input service credit in the CENVAT account. The Revenue raised an objection regarding the timing of availing the credit, alleging a violation of specified rules. However, the Tribunal found that the appellants followed the necessary procedures, including obtaining the discharge certificate before availing the CENVAT credit, as advised by the Range authorities.Issue 3: Availment of CENVAT credit under Rule 4(7) of CCR 2004The Revenue contended that the appellants took the input credit beyond the prescribed period, contrary to the provisions of Rule 4(7) of CCR 2004. However, the Tribunal noted that the appellants waited for the acceptance of their application under VCES before availing the credit, as the payment of input service tax was linked to the VCES declaration and the issuance of the discharge certificate. The Tribunal found that the appellants acted reasonably in availing the credit based on the advice received from the Range authorities and the correspondence exchanged with them.In conclusion, the Tribunal set aside the impugned orders, allowing the appeal filed by the appellant with any consequential relief. The decision highlighted the importance of following due procedures and obtaining necessary certificates before availing tax credits, emphasizing compliance with relevant rules and regulations in such matters.