TaxTMI 
TaxTMI 
2026 (3) TMI 654
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.... respect of various input services. 3. On the allegation, inter alia, that the appellant had provided taxable as well as exempted services during the material period, but had not maintained separate accounts for receipt, consumption and inventory of common input services meant for use in providing output services and had also not registered under the category of 'Input Service Distributor' resulting in irregular availment of CENVAT Credit, a Show Cause Notice dated 05.01.2010 was issued to the appellant, denying CENVAT Credit of Rs.9,33,806/- and Rs.26,94,414/-, proposing recovery thereof and demanding Service Tax of Rs.6,11,37,297/-, along with interest and penalty thereon. 3.1. After due process, the said Notice was adjudicated vide the impugned Order-in-Original dated 28.06.2011 wherein the demands as proposed in the above Show Cause Notice were confirmed, along with interest and penalties. 3.2. Aggrieved by the confirmation of the above demands, along with interest and penalties, the appellant has filed the present appeal. 4. During the course of hearing, the Ld. Chartered Accountant appearing on behalf of the appellant submitted that the demand as confirmed against....
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.... their Head Office had obtained Registration as 'Input Service Distributor' in the year 2004 itself; that subsequently, the Head Office had taken registration through digital mode in the year 2008; the Revenue has construed such date of registration through digital format as the actual 'date of registration' for the purpose of denying the credit distributed by their headquarters/Head Office as Input Service Distributor (ISD). The appellant has referred to the copy of the Digital Registration Certificate obtained by the Head Office wherein it has been specifically mentioned that the appellant's Head Office has registered under the category of "Input Service Distributor" in the year 2004 itself. In view of the above, the appellant contends that the demand of Rs.26,94,914/- confirmed against them by denying the credit distributed by their Head Office is not sustainable. 4.3. With regard to the demand of Rs.6,11,37,297/- as confirmed against them in the impugned order, the submission of the appellant is that the said demand has been raised on the ground that the appellant had opted for option (I) of Rule 6(3A) i.e., opted for payment of 8% of the value of exempted services for the F....
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....rds. 7. We observe that the appellant has been rendering services under the category of "banking and other financial services" as defined under Section 65(12) of the Finance Act, 1994. The impugned demands have been raised on various issues. The main allegation of the Revenue is that during the material period, the appellant has provided both taxable and exempted services, but had not maintained separate accounts for receipt, consumption and inventory of common input services meant for use in providing output services. Further, it is alleged that although the appellant had exercised the option (I) available under Rule 6(3) [Rule 6(3A)] of the CENVAT Credit Rules, 2004, they had not paid the amount @8% of the value of exempted services as prescribed under the said Rules. It has also been alleged that the Head Office of the appellant had not registered as "Input Service Distributor" which had resulted in irregular availment of CENVAT Credit on the input service credit distributed by the Head Office. Accordingly, the said demands have been confirmed vide the impugned order. We now proceed to examine the issues involved in order. Denial of CENVAT Credit of Rs.9,33,806/-: 8. As....
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....anned and reproduced below: - 9.1. From the Certificate extracted above, as produced before us, it can be seen that the appellant's Head Office has been registered under the category of "Input Service Distributor" in the year 2004 itself. We observe that the Department has wrongly construed the date of digital registration as the actual date of registration for raising and confirming the demand. Since the Head Office of the appellant had registered as an Input Service Distributor in the year 2004 itself, we do not find any infirmity in the distribution of credit by the Head Office. 9.2. In any case, it is well settled by various decisions that a substantial benefit cannot be denied merely for not following a procedural requirement. As payment of duty and utilization of service is not in dispute, the denial of CENVAT Credit to this extent is not legally tenable. 9.3. Consequently, the demand confirmed on this count is not sustainable and accordingly, we set aside the said demand. Demand of Service Tax of Rs.6,11,37,297/-: 10. We find that the above demand of Rs.6,11,37,297/- has been confirmed by demanding Service Tax at the rate of 8% of the value of exempted output ....
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.... Explanation I.- If the manufacturer of goods or the provider of output service, avails any of the option under this sub-rule, he shall exercise such option for all exempted goods manufactured by him or, as the case may be, all exempted services provided by him, and such option shall not be withdrawn during the remaining part of the financial year. Explanation II.- For removal of doubt, it is hereby clarified that the credit shall not be allowed on inputs and input services used exclusively for the manufacture of exempted goods or provision of exempted service. 10.3. We have gone through the letter submitted by the appellant exercising the option. For ease of reference, the said letter submitted by the appellant is reproduced below: 10.4. A perusal of the above letter reveals that the appellant has furnished all the details required for availing the option (ii), i.e., for reversal of proportionate CENVAT Credit attributable to exempted services. We observe that the said Rule requires the appellant to exercise the option to the jurisdictional officer only if they are opting for option (ii) of the said Rule. There is no need to opt separately for making payment of....
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....re demand has been raised on the basis of the accounts and other records submitted by the appellant. The Department has also failed to failed to bring any corroborative evidence on record to indicate wilful mis-statement or suppression of facts on the part of the appellant with the intent to evade tax in this case. Thus, we hold that the imposition of penalty on the appellant is unwarranted in the facts and circumstances of the case and hence, we set aside the penalty imposed on the appellant. 12. In the result, we pass the following order: - (i) We set aside the demand of Rs.9,33,806/along with interest, as confirmed in the impugned order. (ii) We set aside the demand of Rs.26,94,914/-, along with interest, as confirmed in the impugned order. (iii) We set aside the demand of Rs.6,11,37,297/- confirmed in the impugned order arrived at on the basis of 8% of the value of exempted output services during the Financial Year 2008-09. We hold that the appellant is liable to reverse the proportionate credit attributable to the value of exempted output services in terms of in terms of option (ii) in sub-rules (3) & (3A) of Rule 6 of the CENVAT Credit Rules, alo....
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..... 3. These intimations and any other information which registrant wishes to bring to the notice of the department can be submitted on-line by the registrant after logging on to web-site. 4. This registration certificate is not transferable. List of Accounting codes Is enclosed. These may invariable be furnished in the chajfan at the time 5. of making payment of service tax. 1/12/8 (S ) ORISODE ) Place : DIVISION HI MUMBAI Name & Siger wetofThe det antral Excise SUARI SINGH Wink Steldal seal 076 , 4:48-111, 844 ax Div-I Date : 10/12/2008 CC : (by email) To (1)The Pay and Accounts Of ces'SER VICE TAX COMMISSIONERATE MOMRAY Mumbai. 95 Document 2 (17 फ़ इंडिया Bank of India Ref. No.KCBB:OPR:DB:08-09: Dated : 15.10.2008 To The Superintendent of Service Tax Office of the Assistant Commissioner of Service Tax Service Tax Commissionerate Division-1, 2nd Floor 180, Rajdanga Main Road, KOLKATA - 700 107 Sir, Modification in the CENVAT Credit Rules 2004 We are regularly paying Service Tax after adjusting 20% of the monthly output Service Tax liability. We are now willing to exercise the o....