Cenvat credit and abatement under service tax exemption cannot be retained together; credit must be reversed if abatement is claimed.

Abatement under Notification No. 1/2006-ST was available only where Cenvat credit had not been availed. The assessee had taken credit on inputs and input services while also claiming the abatement benefit, and the text treats this as an impermissible simultaneous claim of both concessions. Once the assessee was regarded as having opted for the abatement notification, the credit already availed could not be retained and was liable to be reversed. The objection that the notice proposed denial of credit rather than denial of abatement was treated as only technical and insufficient to justify retention of both benefits.

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Issues: Whether the assessee, having availed Cenvat credit, could also retain the benefit of abatement under Notification No. 1/2006-ST dated 01.03.2006.

Analysis: The abatement under the notification was available only if Cenvat credit was not availed. The assessee had taken credit on inputs and input services and also claimed the abatement benefit. Once the assessee was treated as having opted for the abatement notification, the credit already availed could not be retained. The objection that the notice proposed denial of credit instead of denial of abatement was held to be only technical and not a valid ground to permit retention of both benefits.

Conclusion: The assessee could not simultaneously avail Cenvat credit and abatement. The Cenvat credit was liable to be reversed, and the issue is answered in favour of the Revenue.

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