TaxTMI 
TaxTMI 
TaxTMI 
2014 (6) TMI 628
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....ispute, the appellant were paying service tax on the value equal to the gross amount charged minus 75% abatement i.e. on 25% of the gross amount charged. During the period prior to 1.3.2006, same exemption was available under notification no.32/04-ST and in respect of that exemption, the condition was that no cenvat credit of excise duty paid on inputs or capital goods must be taken or the exemption under notification no.12/03-ST is not availed and as such, there was no condition of non-availment of cenvat credit in respect of input services. The appellant during the period of dispute while did not take any cenvat credit of excise duty paid on inputs or capital goods, they availed cenvat credit amounting to Rs.1,09,975/- in respect of certain input services and this was duly disclosed in the ST-3 Returns as the service tax Return filed by them mentioned the amount of service tax paid through the cenvat credit account. When the ST-3 Return was scrutinized and the concerned assessing officer came to know that the appellant during the period of dispute while availing of the exemption notification no.1/06-ST(S.No.6) had simultaneously also availed cenvat credit in respect of input serv....
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....nput services, the benefit of exemption cannot be denied when they immediately reversed this credit along with interest, as soon as this was pointed out to them, that reversal of cenvat credit would amount to non-availment of cenvat credit and hence, the condition of exemption notification stands satisfied, that in this regard, he relies upon the judgement of the Apex Court in the case of Chandrapur Magnet Wires (P) Ltd. Vs. CCE, Nagpur reported in 1996 (81) ELT 3 (SC) , wherein it was held that when exemption under a particular notification was available subject to non-availment of cenvat credit and when cenvat credit initially taken was subsequently reversed prior to clearance of the exempted goods, it would amount to not availing of the cenvat credit and the condition of exemption notification regarding non-availment of cenvat credit stands satisfied, that the Tribunal in the case of Khyati Tours & Tavels Vs. CCE, Ahmedabad reported in 2011 (24) STR 456 (Ahmd.) has held that when exemption under notification no.1/06-ST was available subject to non-availment of cenvat credit and cenvat credit initially taken had been subsequently reversed, the reversal of wrongly availed cenvat c....
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....of these conditions is violated, the exemption would not be available, that it is settled law that exemptions have to be construed strictly and when the exemption is subject to any condition and that condition is not fulfilled, the exemption would not be available, that subsequent reversal of the cenvat credit would not amount to non-availment of cenvat credit, that in this regard, he relies upon the judgement of the Apex Court in the case of Amrit Paper Vs.CCE, Ludhiana reported in 2008 (12) STR 536 (SC), that the judgement of the Apex Court in the case of Chandrapur Magnet Wires (P) Ltd. (supra) is not applicable to the facts of this case as in the case of Chandrapur Magnet Wires (P) Ltd. (supra), the exemption under notification no.69/86-CE was available subject to condition of non-availment of input duty credit and the assessee was manufacturing the goods, which were eligible for exemption under this notification as well as the dutiable goods not eligible for exemption under this notification and was initially availing the cenvat credit on the entire quantity of inputs, but prior to clearance of the exempted goods was reversing the prorata credit and it is in these circumstance....
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....03-ST, dated the 20th June, 2003. Prior to 1.3.2006, the same exemption was available under notification no.32/04-ST dated 3.12.2004 and this exemption was subject to the following conditions:- (i) the Credit of duty paid on inputs and capital goods used in providing such taxable service tax has not been taken under the provisions of Cenvat Credit Rules, 2004; or (ii) the Goods Transport Agency has not availed the benefit of exemption under the notification of the Government of India in the Ministry of Finance (Deptt. of Revenue) No. 12/2003-ST, dated the 20th June, 2003 [G.S.R. 503 (E), dated the 20th June, 2003]. Thus, for availment of 75% abatement in the notification no.1/06-ST which came into force w.e.f. 1.2.2006 the conditions of non-availment of cenvat credit in respect of input service has been added. The appellant's contention is that prior to 1.3.2006, they were availing of the exemption no.32/04-ST and were not availing cenvat credit in respect of inputs or capital goods and that they continued to avail of this exemption even when the notification no.32/04-ST was substituted ....
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....eal before the Tribunal and that even when the cenvat credit initially taken was reversed subsequent to the clearance of the final products, the benefit of exemption notification which was subject to non-availment of cevnat credit cannot be denied. Same view has been taken by Hon'ble Gujarat High Court in case of Ashima Dyecot Ltd. reported in 2008(12) STR 701 (Gujarat) and SLP filed by the Government against this judgement was dismissed by the Apex Court vide order reported in 2009 (240) ELT A-41 (SC). Same view has been taken by the Tribunal in the cases of Khyati Tours & Travels Vs. CCE, Ahmedabad reported in 2011 (24) STR 456 (Tri-Ahmd.) and also in the case of Sri Lakshmi Saraswathi Textiles (ARNI) Ltd. Vs. CCE, Pondicherry reported in 2008 (222) ELT 390 (Tribunal-Chennai) and in the case of B.G. Shirke Technology Pvt. Ltd. CCE, Pune-II reported in 2012 (27) STR 366 (T-M). Thus, it is now a settled law that when the benefit of an exemption is subject to the condition of non-availment of cenvat credit and initially, the assessee has taken the cenvat credit but subsequently, whether before the clearance of the exempted goods or after the clearance of the exemption goods the cred....