2019 (6) TMI 72 - AT - Service Tax

Challenge over Cenvat Credit reversal order emphasizes procedural fairness and adherence to rules

M/s ACE Pipeline Contract Versus C.C.G.S.T, Mumbai West

The case involved a challenge against an order confirming the demand of wrongly availed Cenvat Credit by the Appellant. The Appellant contended that they ... CENVAT Credit - reversal of CENVAT credit on exempt goods - reversal of cenvat credit on proportionate basis done or not - suppression of facts or not - HELD THAT:- A similar issue has come up for consideration before the Principal Bench Tribunal in the matter of M/S JAI BALAJI INDUSTRIES LIMITED VERSUS CCE & ST, RAIPUR [2016 (12) TMI 841 - CESTAT NEW DELHI] in which although the assessee reversed the cenvat credit on proportionate basis, but the same was not accepted by revenue authorities. Since in the instant matter also it is one of the contentions of the Appellant that the reversal of proportionate cenvat credit has not been considered by the authorities below while deciding the matter, therefore without going any further in the merits of the matter and following the decision as aforesaid, I am inclined to remand the matter to the Adjudicating Authority. Appeal allowed by way of remand. Issues:Impugned order confirming demand of wrongly availed Cenvat Credit; Appellant's contention of reversal of Cenvat Credit on proportionate basis not considered; Invocation of extended period for demand; Application of Rule 6(3) of CCR, 2004; Applicability of Jai Balaji Industries Ltd. case; Remand for verification of proportionate reversal of Cenvat Credit.Analysis:The judgment deals with the challenge against an order confirming the demand of wrongly availed Cenvat Credit by the Appellant. The Appellants were registered for various services and were found to have availed Cenvat Credit without maintaining separate accounts for taxable and exempted services as required under Rule 6(3)(iii) of CCR, 2004. The demand was raised for the period April 2010 to March 2014, and the Adjudicating Authority confirmed the demand along with interest and penalty. The Appellant contended that they had already reversed the Cenvat Credit before the show cause notice was issued, but this aspect was not considered in the impugned order.The Appellant argued that there was no suppression of facts as there were correspondences with the department prior to the issuance of the notice. The Appellant also relied on the Jai Balaji Industries Ltd. case, where the Tribunal observed that once Cenvat credit is reversed, it is considered as not availed. The Tribunal directed a remand to verify if the amount reversed by the Appellant satisfied the requirement of proportionate reversal. Similarly, in the present case, the Appellant contended that the reversal of proportionate Cenvat Credit had not been considered by the authorities below, leading to a remand for verification.The judgment emphasized the importance of proportionate reversal of Cenvat Credit and the need for the Adjudicating Authority to verify if the reversal made by the Appellant met the requirements. The matter was remanded for a fresh decision, ensuring a fair opportunity of hearing for the Appellant. The decision was based on the principles laid down in the Jai Balaji Industries Ltd. case, highlighting the significance of following proper procedures for availing and reversing Cenvat Credit. The Appeal was allowed by way of remand, indicating a procedural flaw in the original decision that needed rectification through a reevaluation of the proportionate reversal of Cenvat Credit.