TaxTMI 
TaxTMI 
2022 (7) TMI 194
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.... recovered under Rule 14 of Cenvat Credit Rules' 2004 read with proviso to Section 73(1) of the Finance Act, 1994. (b) The Interest involved on the aforesaid amount should also be recovered from the party under rule 14 of CENVAT Credit Rules, 2004 read with provisions to Section-75 of Finance Act 1994. (c) The Penalty of Rs.66,36,774/- under Rule 15(3) of the CENVAT Credit Rules, 2004 read with Section-78 of the Finance Act, 1994 is imposed upon the party for fraudulent availment of cenvat credit. 2. (a) The demand of Service Tax amounting to Rs.7,59,918/- is hereby confirmed under proviso to Section 73(1) of the Finance Act,1994. The party is directed to pay it forthwith. (b) The Interest involved on the aforesaid amount should also be recovered from the party under the provisions of Section-75 of Finance Act 1994. (c) The Penalty of Rs.7,59,918/- is also imposed upon the party under Section-78 of the Finance Act, 1994. 3. (a) The demand of Service Tax amounting to Rs.75,555/- is hereby confirmed under proviso to Section-73 of the Finance Act,1994. As Service Tax of Rs.75,555/- already stands deposited vide Challan no.1024,....
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.... by way of refund of such service tax during the relevant period. Oct 2011 to June 2013 INR 66,36,774/- II. Service tax liability under reverse-charge mechanism on rent-a-cab services April 2013 to March 2014 INR 7,59,918/- III Penalty imposed under Section 73 (4A) of the Finance Act, 1994 April 2013 to March 2014 INR 75,555/- IV Penalty imposed under Rule 15 (3) of CENVAT Credit Rules read with Section 78 of the Finance Act, 1994 and Interest under Rule 14 of CENVAT Credit Rules read with Section 75 of the Finance Act, 1994 31.03.2014 INR 18,62,067/- V Recovery of amount of Cenvat credit taken on various input services along with interest 2013-14 & 2014-15 INR 8,59,239/- 3. Each of these heads would be taken up separately. I Disallowance of CENVAT credit taken on service tax paid on input services received by the SEZ unit. 4. During the relevant period, the appellant had availed and utilised the CENVAT credit of service tax paid on input services received in its Special Economic Zone [SEZ] Unit. The appellant could also have claimed exemption by way of refund of the said service tax by virtue of Notifications dated ....
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....against its respective output service tax liability. Further, as the Exemption Notifications specifically prescribe a condition that the SEZ unit should not have taken CENVAT credit if it wants to claim a refund, the Central Government recognized that an SEZ unit may take CENVAT credit as an alternative benefit to the refund and such taking of CENVAT credit is a legally permissible option under the CENVAT Credit Rules, 2004 [the Credit Rules ]. In support of this contention, learned Counsel placed reliance upon the judgment of the Delhi High Court in Commissioner of Central Excise vs. Grand Card Industries [2014 (305) ELT 19 (Del.) ]. 8. Shri B.K. Jain, learned authorized representative appearing for the Department, however, supported the impugned order and contended that an Exemption Notification should not be liberally construed and the beneficiary must fall within the ambit of the exemption and fulfil the conditions thereof. In support of this contention, learned authorized representative placed reliance upon the judgment of the Supreme Court in Krishi Upaj Mandi Samiti, New Mandi Yard, Alwar vs. Commissioner of Central Excise and Service Tax, Alwar [2022 (LiveLaw) (SC) 203].....
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....ed to benefit of the Modvat scheme for unlimited value and pass on benefit to the purchaser. But an SSI unit covered by the exemption notification would not be entitled to the benefit of the Modvat scheme but would be entitled to clear goods at nil duty or lesser duty only up to a limit. Because he cannot pass on the Modvat credit, to the purchaser, he is denied a level playing field and suffers disadvantage. This clearly is not the purpose behind the Modvat scheme and the exemption notification. 22. A manufacturer cannot simultaneously avail of double benefits one of the Modvat Scheme and the other of the exemption notification unless expressly permitted to do so. In case a manufacturer is covered both under the Modvat scheme and an exemption notification, then the manufacturer should have the right to choose to avail the benefit of either of the two whichever is more attractive and beneficial. The choice once exercised is binding and final and interchange may not be permissible, unless allowed but this is different to arguing that choice is not available. The two provisions are in alternative but the right of choice is not curtailed. 23. The Supreme Court of Ind....
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....e in or in relation to the manufacture of other goods on which appropriate duty of excise is payable. 10. Thus, this notification is condition precedent. The applicability of this notification shall be subject to the condition stipulated therein, i.e., the principal manufacturer discharging the liability of appropriate duty of excise on these manufactured goods. Any job worker who undertakes services of processing is not free to avail the benefit of the said notification unless the recipient of the services pays appropriate duty of excise on the goods returned back by the job worker. This condition of payment of appropriate duty of excise by the recipient i.e., the principal manufacturer is sine qua non for availing the benefit of the notification by the job worker. Thus, the condition stipulated in the notification establishes that it is a conditional notification. 11. Section 5A(1A) of the Central Excise Act provides for power to grant exemption from duty of excise. Section 5A(1A) of the Central Excise Act specifically provides that "for the removal of doubts, it is hereby declared that where an exemption under sub-section (1) in respect of any excisable goods f....
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.... Credit Rules, but this Notification merely clarifies the position and would, therefore, be applicable retrospectively for the period when the appellant had taken the CENVAT credit of service tax paid on input services. 13. In this connection, reliance can be placed on the judgment of the Supreme Court in Belarpur Sugar & Allied Indus. Ltd. vs. Collr. Of C.Ex., Aurangabad [1999 (108) ELT 9 (SC)]. The issue involved was whether an assessee would be entitled to duty reduction available under an amending Notification before the date of issue of that Notification. The Supreme Court held that denial of the Exemption Notification for the period prior to the date of the amending Notification shall defeat the object and purpose of the Notification itself since the purpose of both the original and the amending Notifications was to give incentive for increasing production of goods which would be effectively served only if the amending Notification was made available to the prior period as well. The relevant portion of the judgment of the Supreme Court is reproduced below : "9. Before we proceed to scrutinise the Notifications, the law to interpret is settled. Unless there is anyt....
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....e service tax paid on input service received by the appellant. 16. In this view of the matter, the finding recorded by the Commissioner (Appeals) disallowing CENVAT credit taken on service tax paid on input services received by the SEZ unit on the ground that the SEZ Unit could only have opted for exemption by way of refund of such service tax cannot be sustained. II Service tax liability under reverse-charge mechanism on rent-a-cab services 17. The Order has confirmed the demand of Rs. 7,59,918/- of service tax with interest and penalty upon the appellant on the ground that the appellant had recovered expenses incurred on rent-a-cab services from its customers, but had not paid service tax on a reverse-charge mechanism on these services. 20. It transpires from the records that a letter dated 14.10.2014 was issued by the Superintendent, Service Tax Range-1, Noida to the appellant alleging that the scrutiny of records submitted by the appellant showed that the appellant had recovered expenses amounting to Rs. 1,72,70,301/- from its customers towards rent-a-cab services and for this allegation reliance was placed on a chart. In this chart titled "Details of Hire of Veh....
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....is, therefore, clear that additional demand of service tax is claimed on the amount on which service tax has already been paid by the appellant. This demand has been computed by wrongly interpreting an internal ledger item. The Commissioner (Appeals) failed to appreciate this factual position. 24. The demand made under this head, therefore, cannot be sustained. III Penalty imposed under section 73(4A) of the Finance Act 25. This demand was confirmed against the appellant on the ground that the appellant had received services from outside India and was liable to pay service tax of Rs. 75,555/- under the reverse charge mechanism. This amount was originally not reflected in the service tax returns, and had been paid belatedly by the appellant with interest of Rs. 7,774/- on 25.07.2014, much prior to the issuance of the show cause notice dated 31.03.2016. Despite the payment of the service tax with interest, the Department raised a demand of Rs. 75,555/- with penalty under section 73(4A) of the Finance Act. 26. It is pertinent to note that the case of the appellant is squarely covered by the provisions of sub-section (3) of Section 73 of the Finance Act, 1994 read with E....
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....y order dated 25.05.2015 in Company Petition No. 608/2014; (d) The show cause notice contained demands of interest under rule 14 of the Credit Rules read with section 75 of the Finance Act and penalty under rule 15 (3) of the Credit Rules read with section 78 of the Finance Act; (e) No specific allegation of fraud, collusion, wilful mis-statement, suppression of facts or intent to evade payment of service tax had been raised in the show cause notice; and (f) Specific submissions had been raised by the appellant that its case was covered by the provisions of rule 4 (7) of the Credit Rules, 2004. 30. Learned counsel for the appellant had submitted that in such circumstances taking CENVAT credit and reversing the same is permissible under rule 4 (7) of the Credit Rules. This rule is reproduced below: "4. Conditions for allowing CENVAT credit. (7) The CENVAT credit in respect of input service shall be allowed, on or after the day on which the invoice, bill or, as the case may be, challan referred to in Rule 9 is received: Provided that in respect of input service where whole or part of the service tax is liable to be paid by the ....
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....he appellant on various input services were disputed on the ground that these were "inadmissible input services". 36. The appellant categorized the input services which were considered to be inadmissible by the Department separately and the admissibility of each category was explained therein. A table was also presented by the appellant in the reply dated 12.12.2014 to the audit objections and the reply dated 05.07.2016 to the show cause notice. 37. The disallowance of CENVAT credit appears to be in respect of five input services namely, Management or Business Consultant services (Rs. 4,66,254/-), Maintenance or repair services (Rs. 1,92,323,/-), Courier services (Rs. 19,176/-), Storage and warehouse services (Rs. 16,329/-) and Technical Testing and Analysis services (Rs. 2,853/-). 38. Learned counsel for the appellant pointed out how the five input services were used in provision of Information Technology services to the customers and also demonstrated the nexus between the input services and the output service. Learned counsel also pointed out that the definition of "input service" in rule 2 (l) of the Credit Rules, as applicable for the relevant period, is an inclusive ....