Appellant wins CENVAT credit dispute for set top boxes after proper compliance with Rule 4 and Rule 9 procedures

CESTAT Hyderabad allowed the appeal regarding CENVAT credit for manufacturing/trading of set top boxes. The appellant maintained proper electronic books of accounts using tally software, regularly filed audited reports with IT department, and took input service tax credit within prescribed periods under Rule 4 and Rule 9 of CCR 2004. Revenue's confusion arose from credit reflection under "duties and taxes" head in trial balance. Since appellant complied with prescribed procedures and no output tax dispute existed, the impugned order was set aside.

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Issues involved:
The issue in this appeal is whether the appellant has rightly taken credit of input service tax.

Details of the judgment:
The appellant, a partnership firm engaged in providing Cable TV service, was found to have not filed regular returns and was issued summons to furnish financial statements and other documents. It was revealed that the appellant was liable to service tax for various services provided. The appellant had maintained regular books of accounts and had paid service tax using Cenvat credit. However, Revenue contended that the Cenvat credit was irregularly taken and utilized, leading to a show cause notice (SCN) being issued. The appellant contested the SCN, emphasizing that they maintained proper records and regularly paid service tax. The Commissioner confirmed the demand raised in the SCN, leading the appellant to appeal before the Tribunal.

The Tribunal noted that the appellant had maintained proper books of accounts audited by a Chartered Accountant and had regularly taken Cenvat credit of input service tax within the prescribed period. The confusion arose due to the reflection of input tax credit under a specific account head. The Tribunal held that the appellant had complied with the rules regarding Cenvat credit and set aside the impugned order. The appellant was entitled to consequential benefits.

Separate Judgment delivered by the Judges:
None.

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