TaxTMI 
TaxTMI 
2024 (7) TMI 311
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Rules. 2004 (CCR for short) and therefore were not eligible for Cenvat Credit taken or availed in excess of such caps. Similarly, for the period 2008-09 to 2009-10, since admittedly the appellant did not maintain separate accounts for the common inputs or input services used in or in relation to the provision of both taxable and exempted output service, they were also liable to pay an amount at the rate of 8% of the value of the exempted services. In addition, they were liable to pay interest. 3. In the Order-in-Original, Commissioner has examined issues involved in view of the legal provisions under CCR. These issues are covered as under : (i) Whether an amount of Rs. 92,33,706/- being the credit utilised in excess of 20% of the service tax paid during the period 2005-06 to 2007-08 and is recoverable from them under proviso to Section 73(1) of the Finance Act , 1994. (ii) Whether an amount of Rs. 6,20,97,026/- being 8% on the value of exempted services rendered during the period from 2008-09 to 2009-10 is recoverable from them under proviso to Section 73(1) of the Finance Act, 1994 (iii) Whether interest of Rs. 5,58,031/- as mentioned at paras 6(a) & (b) is payable b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d amount got adjusted. The Adjudicating Authority felt that they will therefore be liable to pay interest for the gap as per due date and date of adjustment of advance. 7. Further, on recovery issues, the Adjudicating Authority has decided as under : (1) cenvat credit taken before payment of the bill to the service provider : - On verification of the documents pertaining to the Cenvat Credit availed , it was observed that in certain case the assessee availed input tax credit before making payment to the service provider. As per Rule 4(7) of Cenvat Credit Rules, 2004, the credit shall be allowed on or after the day on which the payment is made the value of input service and service tax paid or payable as is indicated in the invoice bill or, as the case may be, challan referred to in Rule 9. The credit so utilized by the assessee worked out to Rs. 1,12,029/- as shown in the annexure V to the Notice. The assessee was required to pay interest on the above amount from the date on which credit taken till the date of payment as per Section 75 of Finance Act, 1994. (2) Cenvat Credit taken @ 100%, instead of 50% of capital goods : - On verification of input credit documents ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nrelation to the manufacture of exempted goods or for provision of exempted service. He has, however, fairly conceded that they are not disputing the payment of interest and infact they have already paid the interest applicable for delayed payments. For the period prior to 01.03.2008, they have relied on the following judgments in support thereof: a. Infinium Motors Guj. Pvt Ltd., Vs CST, Ahmd [2023 (11) Centax 245 (Tri-Ahmd)] b. Ingersoll-Rand Technologies & Services (P) Ltd., Vs CCE, Ghaziabad [2023 (8) Centax 41 (Tri-All)] c. Idea Cellular Ltd., Vs CCE, Thane [2013 (32) STR 294 (Tri-Bom)] For the period from 01.03.2008 to 31.03.2010, they have relied on following judgments: 1. Tiara Advertising Vs UOI [2019 (30) GSTL 474 (Telangana)] 2. Lyka Labs Ltd., Vs CCE & ST [2024 (18) CENTAX 367 (Tri-Ahmd)] 3. Rockey Marketing (Chennai) Pvt Ltd., Vs CC,ST, Chennai - Final Order No. 40936/2020 4. Cranes & Structural Engineers Vs CCE, Bangalore [2017 (374) ELT 112 (Tri-Bang)] 5. Mafatlal Industries Ltd., Vs CCE & ST, Ahmd [2020 (43) GSTL 562 (Tri- Ahmd)] 6. Sanofi India Ltd., Vs CCE & ST, Surat-II [2023 (5) Centax 270 (Tri- Ahmd)] 7. Mercedes Benz India (P) Lt....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nufacture of exempted goods or exempted service except in the circumstances mentioned in the sub-rule (2) of the said Rules. Sub-rule (2) of Rule 6 provides for maintenance of separate records in respect of inputs, input services substantiating use of input and input services for taxable and exempted goods or services. Sub-rule (3) of Rule 6 provides that in case separate accounts are not maintained, the manufacturer or provider of services shall follow either of the conditions stipulated in sub-rule (3) of Rule 6. It is pertinent to note that after the amendment the only change that could be seen in respect of sub-rule (3) is to the extent of payment in respect of exempted goods produced or exempted services provided. While there is a cap on the utilisation of credit attributable to exempted goods or services, there is no cap whatsoever on the availment of CENVAT credit and there is no mention of any lapse of credit after utilisation of credit of 20% prior to 1.4.2008 or after payment of requisite percentage of value after 1.4.2008. Just because the services provided by the appellants have become taxable with effect from 1.4.2008, it cannot be said that the credit already availed ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ular having been issued by CBIC. Learned counsel for the appellants submits that the circular has been taken from the website of www.taxmanagementindia.com and was signed by Shri Gowtham Bhattacharya, Commissioner of Service Tax; Madurai Commissionerate has issued Trade Notice No.14/2009 dated 13.3.2009, Service Tax No.6/2009; the said circular was followed by the Tribunal in various decisions. We find that as per our discussion above, there is no provision in the Rules for the credit availed to lapse once the conditions therein have been fulfilled. Therefore, we find that despite the circular the issue is clear. We find that this Bench in the case of DHL Logistics Pvt. Ltd. (supra) has held that: "5.1 As regards the denial of Cenvat credit to the extent of 2.85 crore, on the ground that the appellant did not maintain separate accounts towards utilization of credit in respect of both taxable and exempt services and also utilization of credit in excess of 20%, it is noted that the cap of 20% is applicable on the service tax payable and not on the service tax credit actually availed. What is restricted is only utilisation of the credit and not taking the credit per se; the credit ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n from the above that Tribunal has concluded the issue independently and sought to reinforce the decision on the basis of the purported circular. Therefore, we find that the existence or otherwise of the circular is inconsequential. However, it is not clear as to why Madurai Commissionerate has issued such a Trade Notice based on the Circular and as to whether the same was withdrawn subsequently. However, as we find that the appellants claim to the unutilised credit is correct on merits, we do not find any reason to go into the circular. 13. Therefore, in essence, following the ratio of these judgments of the Co-ordinate Bench, we are inclined to accept the proposition of the Department that appellants were not entitled to utilise more than 20% of the credit availed for discharging the service tax and therefore whatever has been utilised in excess of that cap was liable to be recovered in accordance with the demand made in the show cause notice. However, we are not inclined to accept the proposition that the remaining amount of credit would otherwise lapse, as there was no provision under the rules or statute during said period for such lapsing of the credit or for non-availment o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n filed for refund of Rs.49,24,398/. On perusal of the impugned order, we find that the Commissioner (Appeals) has observed as under : "9. It is observed that the value of exempt service as determined by the appellant in view of Rule 6 (3D) (c) is Rs.11,68,48,502/- (10% of cost of exempt goods sold) on which the amount required to be reversed @ 7% vide Rule 6(3) (i) is Rs.81,79,395/-. However, the appellant have reversed / paid Rs.86,10,981/- resulting in excess payment of Rs.4,31,586/-. 10. It is observed that the impugned reversal/payments were made in December, 2015 and the refund claim was filed in February,2016. Hence, the refund claim is not hit by time bar. Regarding unjust enrichment, it appears that appellant's claim that they have not passed on the incidence of the impugned amount to any other person is prima facie acceptable. However, this shall be proved by the appellant beyond pale of doubt with the support of documents and records." From the above observation, it can be seen that the appellant has been compelled to reverse credit @ 7% of the value of exempted services under Rule 6 (3) (i) read with Rule 6 (3D) (c) only for the reason they have not followed th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt has furnished details of the credit availed and the amount reversed by them along with the letters issued to department. The indirect tax regime has been shifted from Service Tax to GST, appellant would be eligible for cash refund of such amount. However, we direct the lower authority to quantify the amount eligible for refund after complying with Rule 6 (3) (i) being the proportionate credit availed on exempted services. We find the issue under consideration in the appeal in favour of the assessee and against the Revenue. For the limited purpose of quantification of the amount eligible for refund, we remand the matter to the adjudicating authority. Needless to say that refund being of input service credit, the question of unjust enrichment does not arise. The appeal is allowed in above terms." The Co-ordinate Bench held that the option cannot be forced on the appellant and that non-compliance with the procedure prescribed under Rule 6(3A) of CCR does not result in loosing substantive right to avail the option of reversing proportionate credit as envisaged in Rule 6(3). Therefore, we find that there is merit in the argument of the appellant that he is entitled to opt for payme....