Cenvat credit on reverse charge ocean freight upheld, with cash refund allowed under transitional GST provisions.

Cenvat credit on ocean freight service tax paid under reverse charge was treated as eligible where there was no supplementary invoice and no allegation or finding of fraud, collusion, wilful misstatement or suppression. On that basis, the credit was held refundable in cash under the transitional GST scheme, and consequential relief including interest followed. The department's objection based on the Cenvat Credit Rules was not accepted on the facts stated, because the payment made pursuant to the audit objection did not lose its character as eligible credit in the absence of the prescribed bar.

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Issues: Whether the appellant was entitled to Cenvat credit of service tax paid under reverse charge mechanism on ocean freight and consequential refund under the transitional provisions, despite the department's objection based on supplementary invoice and alleged ineligibility under the Cenvat Credit Rules.

Analysis: The dispute turned on whether the payment made pursuant to the audit objection could be treated as eligible service tax credit and whether the bar relating to supplementary invoices and fraud, collusion, wilful misstatement or suppression applied. The record showed that there was no supplementary invoice and no allegation or finding of fraud or suppression. In those circumstances, the amount paid under reverse charge was treated as eligible Cenvat credit. The transitional scheme under the CGST regime was applied to hold that the eligible credit was refundable in cash.

Conclusion: The appellant was held entitled to Cenvat credit and refund of the service tax amount paid under reverse charge mechanism, with interest and consequential relief.

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