2024 (9) TMI 773 - AT - Service Tax

CENVAT Credit allowed despite non-payment of 10% invoice value following Hindustan Zinc precedent

M/s. Steel Authority of India Limited Versus Commissioner of Central Excise, Customs and Service Tax, Bhubaneswar-II Commissionerate And Commissioner of Central Excise, Customs and Service Tax, Rourkela Commissionerate Versus M/s. Steel Authority of India Limited

CESTAT Kolkata allowed the appellant's appeal regarding CENVAT Credit eligibility. The Revenue contended that non-payment of 10% of invoice value ... Re-quantification undertaken by the ld. adjudicating authority - requirement of dropping a huge portion of the demand on this count alone - The Revenue took the view that since they were not paying to the extent of 10% of the invoice value, the assessee-appellant is not eligible to avail CENVAT Credit, to that extent - HELD THAT:- The issue is no more res integra. The Delhi Bench of the Tribunal in the case of M/S HINDUSTAN ZINC LIMITED VERSUS CCE, JAIPUR-II [2017 (4) TMI 1323 - CESTAT NEW DELHI] has held 'identical issue decided in the case of M/s. Hindustan Zinc Ltd. Versus C.C.E. Jaipur-II [2017 (1) TMI 373 - CESTAT NEW DELHI], where it was held that in case of any amount retained or discounted after the invoices were issued, the credit need not be changed and full credit of service tax paid to the service provider will be eligible for credit'. The ratio laid down under these Tribunal decisions are squarely applicable to the facts of the present case. Accordingly, the impugned order is set aside and the appeal filed by the assessee-appellant is allowed. Appeal disposed off. Issues:Denial of CENVAT Credit due to retention of 10% of invoice value by assessee, Re-quantification of ineligible CENVAT Credit by the adjudicating authority, Applicability of case-law on denial of CENVAT Credit on retained portion of invoice value.Analysis:The judgment by the Appellate Tribunal CESTAT Kolkata involved the issue of denial of CENVAT Credit to the assessee due to the retention of 10% of the invoice value. The Revenue contended that since the assessee did not pay the full invoice value, they were not eligible for CENVAT Credit. A Show Cause Notice was issued to deny CENVAT Credit amounting to Rs.13,34,13,383 for transactions from 2008-09 to 2010-11. The adjudicating authority re-quantified the ineligible CENVAT Credit to Rs.89,76,703, leading to appeals from both parties.The assessee argued that they retained 10% of the invoice value as a precautionary measure and released it to the vendor upon satisfaction with the services rendered. They relied on case-law precedents, such as Hindustan Zinc Ltd. cases, where the Tribunal held that CENVAT Credit cannot be denied on the retained portion of the invoice value. The Revenue's appeal was based on the re-quantification done by the adjudicating authority, which they believed did not justify dropping a significant portion of the demand.The Tribunal, after hearing both sides, referred to the Delhi Bench's decisions in Hindustan Zinc Ltd. cases, where it was established that denial of CENVAT Credit on retained amounts was not justified. The Tribunal set aside the impugned order and allowed the appeal filed by the assessee. Consequently, the Revenue's appeal, based on the re-quantification issue, was deemed infructuous and dismissed. The judgment highlighted the applicability of the case-law on similar facts to the present case, leading to the disposal of the appeals in favor of the assessee.