2019 (6) TMI 22 - AT - Service Tax

Tribunal remands case for fresh assessment, stresses importance of considering all evidence for CENVAT credit eligibility

M/s ZK Beauty And Fitness Private Limited Versus Commissioner Of Central Excise & Central Tax, Mangalore Commissionerate

The Tribunal allowed the appeal by remanding the case for a fresh assessment, emphasizing the importance of considering all relevant evidence before ... CENVAT Credit - input services - Health club and fitness centre services - case of Revenue is that in the absence of the endorsement in the Bill of Entry, the appellant are not eligible to avail the credit on the goods received by Z.K. Beauty & Fitness Pvt. Ltd., Mumbai as per Rule 9(1) of the CENVAT Credit Rules 2004 - HELD THAT:- The appellant imported the capital goods at their Mumbai office but later on transferred to Mangalore and claimed the CENVAT credit and depreciation on the capital goods but the appellant did not produce any documents before the Adjudicating Authority to establish the transfer of the capital goods from their Mumbai office to Mangalore - Further, before the Commissioner (A), the appellant did produce some photocopies of the documents to prove the transfer of capital goods from Mumbai to Mangalore but the Commissioner (A) refused to take cognizance of the same on the ground that they were not produced before the Original Authority and the Original Authority did not get a chance to examine those documents and therefore, the Commissioner (A) refused to take cognizance of the documentary evidences produced before him. It is deemed fit to remand the case to the Original Authority with a direction to pass a fresh de novo order after affording an opportunity to the appellant to produce all the documents in his possession to prove the transfer of capital goods from Mumbai to Mangalore and also on other issues involved in the present case - appeal allowed by way of remand. Issues:1. Eligibility of CENVAT credit on imported capital goods.2. Compliance with CENVAT Credit Rules, 2004 regarding depreciation and credit availed.3. Transfer of capital goods from one location to another for availing credit.4. Rejection of appeal by Commissioner (Appeals) and request for remand.Issue 1: The appellant imported capital goods for providing health club and fitness services but faced scrutiny regarding the eligibility of CENVAT credit. The Department observed that by claiming depreciation under Income Tax on the total value of the capital goods, the appellant rendered themselves ineligible for availing CENVAT credit as per Rule 4(4) of CENVAT Credit Rules, 2004. Additionally, the absence of an endorsement in the Bill of Entry for the transfer of goods to the appellant's premises raised questions about their eligibility for credit under Rule 9(1) of the CENVAT Credit Rules. The appellant was also found to have contravened Rule 4 of the CENVAT Credit Rules by availing 100% credit in the same financial year instead of the prescribed 50%. Consequently, the wrongly availed credit was demanded to be recovered along with interest under relevant provisions of the Act.Issue 2: The appellant submitted computations of depreciation and reversed an amount claimed on the capital goods. Despite detailed submissions and evidence presented, the demand for irregular CENVAT credit was confirmed, and a penalty was imposed as per Rule 15(3) of the CENVAT Credit Rules. The Commissioner (Appeals) upheld this decision, leading to the current appeal challenging the rejection of the appeal.Issue 3: The appellant contended that they had transferred the capital goods from Mumbai to Mangalore for actual use, supported by documents produced during the appeal. However, the Commissioner (Appeals) refused to consider these documents as they were not presented before the Original Authority. The appellant argued that they possessed sufficient evidence to prove the transfer and eligibility of the CENVAT credit, requesting a remand to present all relevant documents for consideration.Issue 4: After hearing both parties and examining the records, the Tribunal found merit in the appellant's argument regarding the transfer of capital goods and the need for a fresh assessment based on all available evidence. The Tribunal remanded the case to the Original Authority to conduct a de novo order, affording the appellant an opportunity to substantiate the transfer of goods and address all issues raised in the case.In conclusion, the Tribunal allowed the appeal by remanding the case for a fresh assessment, emphasizing the importance of considering all relevant evidence before making a decision on the eligibility of CENVAT credit and compliance with the CENVAT Credit Rules, 2004.