Tribunal grants Cenvat Credit for delayed services, emphasizing duty payment, compensation as escalated price.

The Tribunal allowed the appeal, holding that the appellant was entitled to Cenvat Credit on compensation paid to a service provider for delayed services. The Tribunal emphasized that once duty is paid, credit cannot be denied, and assessment cannot be reopened at the recipient's end. The compensation was considered an escalated price in the supplementary invoice, and the appellant was found not to have evaded duty. The show cause notice, invoking extended limitation, was deemed invalid due to the absence of malafide intent.

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Issues:
Appeal against denial of Cenvat Credit on compensation paid to service provider for delayed services.

Analysis:
The appellant, engaged in manufacturing lead, zinc concentrates, zinc cathode, and Sulfuric Acid, availed Cenvat Credit on Service Tax paid for compensation to a service provider for delayed services. The Department issued a show cause notice proposing recovery of the availed credit along with interest and penalty. The appellant contended that the compensation was for enhanced value of services received, and the service provider had already discharged the liability. Citing relevant case laws, the appellant argued for eligibility of Cenvat Credit and challenged the time-barred notice. The Department argued that the compensation was not part of the service contract, thus denying the credit.

The Tribunal referred to the decision in CCE vs. MDS Switch Gear Ltd., where the recipient was entitled to credit of duty paid. It was noted that Circular No. 1014/2 clarified the admissibility of Cenvat Credit when duty is paid by the supplier. Relying on settled law, the Tribunal held that once duty is paid, credit cannot be denied, and assessment cannot be reopened at the recipient's end. The compensation was viewed as an escalated price in the supplementary invoice. Citing the Thyssenkrupp case, the Tribunal emphasized that the appellant was entitled to credit based on the supplementary invoice.

Concluding, the Tribunal found no intent to evade duty and held that the Cenvat Credit could not be disallowed. The show cause notice, invoking extended limitation, was deemed invalid due to absence of malafide intent. Therefore, the order under challenge was set aside, and the appeal was allowed.

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