2023 (8) TMI 848

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....ived by them as this exemption was subject to the condition that they should not take the Cenvat Credit on account of inputs, capital goods or input services used by them for providing this service. On scrutiny of their ST-3 Returns, it was found that the Appellant had taken Cenvat Credit to the extent of Rs.4,59,107/- and also used the same towards discharge of their Service Tax liability. The Department has taken the view that they are contravening the condition imposed under the Notification No. 01/2006 and issued Show Cause Notice demanding Service Tax on the entire consideration without the benefit of any abatement provided under this Notification. In the due course, the Adjudicating Authority confirmed the demand with interest and pen....

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....ly on the basis of scrutiny of these Returns, the Department has issued the Show Cause Notice. Therefore, this proves that the Appellant has not suppressed any fact but has declared the details of Cenvat Credit taken and their utilization in the ST 3 Returns. Therefore, we are inclined to accept their explanation that this was an inadvertent error on their part. It is also seen that after the OIO was passed, they have reversed the entire Cenvat Credit. 7. The Hon'ble Supreme Court in the case of Chandrapur magnet Wires cited supra has held as under:- 7. In view of the aforesaid clarification by the Department, we see no reason why the assessee cannot make a debit entry in the credit account before removal of the exempted final product. I....

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....ave gone through this judgment. In Para 18 of this judgment it has been held by the High Court that if the exemption is subject to non-availment of modvat credit on inputs, the subsequent reversal of modvat credit amounts to non-taking of credit on inputs and the benefit of exemption notification number 15/94-C.E., is to be granted, even when reversal of credit on inputs was done at Tribunal stage. 8.1 The above judgment of the High Court is based on five member bench decision of the Tribunal in the case of Franco Italian Company Private Limited v. C.C.E., 2000 (120) E.L.T. 792. This judgment in turn based on the Supreme Court judgment in the case of Chandrapur Magnet Wire Private Limited v. C.C.E., Nagpur, 1996 (81) E.L.T.3. 8.2 I have....