Custom, Excise & Service Tax Tribunal
M/S Archivista Engineering Projects ... vs Commissioner Of Central Excise, ... on 9 April, 2015
IN THE CUSTOMS, EXCISE AND SERVECE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI COURT NO. IV APPEAL NO. ST/88218/14 MUM (Arising out of Order-in-Appeal No. PUN-EXUS-003-APP-001-14-15 dated 01.04.2014 passed by the Commissioner of Central Excise (Appeals), Pune-III.) For approval and signature: Honble Shri Anil Choudhary, Member (Judicial) =====================================================
1. Whether Press Reporters may be allowed to see : No
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the : Yes CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether their Lordships wish to see the fair copy : Seen
of the order?
4. Whether order is to be circulated to the Departmental : Yes
authorities?
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M/s Archivista Engineering Projects Pvt. Ltd.
: Appellant
Versus
Commissioner of Central Excise, Pune-III
: Respondent
Appearance
Shri Bharat Raichandani, Advocate
: For Appellant
Shri B.K. Iyer, Supdt. (A.R.)
: For Respondent
CORAM:
HONBLE SHRI ANIL CHOUDHARY, MEMBER (JUDICIAL)
Date of Hearing : 09.04.2015 Date of Decision: 09.04.2015
ORDER NO.......................................................
Per: Anil Choudhary:
The appellant company is engaged in the business of civil construction and is registered with the Service Tax Department under the category of Construction Service. By the impugned Order-in-Appeal the CENVAT credit on input services availed by the appellant during the period 01.04.2006 to 30.09.2006 have been disallowed as such credit was taken on 01.04.2006, on which date vide Notification No. 1/2006-ST dated 01.03.2006 was issued. The said Notification provided that in respect of construction service of civil nature an abatement of 67% will be allowed from the gross amount, subject to the condition that the assessee will not be allowed to take CENVAT credit on inputs as well as input services.
2. The admitted facts as per the show-cause notice are that in the course of audit conducted by the Revenue for the period 01.04.2004 to 30.09.2006, it was seen that the appellant was availing abatement under Notification No. 15/2004, wherein the appellant had been availing exemption granted of 67% of the value of taxable service provided on the condition that for availing the abatement, no CENVAT credit paid on inputs or capital goods shall be availed by the service provider during the period. The said condition was modified by Notification No. 1/2006-ST dated 01.03.2006 wherein it was provided that in relation to non-availment of CENVAT credit on inputs and capital goods and assessee will not be entitled to avail CENVAT credit on the input services also. The appellant had for input services received during the period 01.04.2004 to 30.09.2006 had availed input credit of Rs. 2,86,865/- and Rs. 8,19,614/- as reflected in ST-3 return for the period 01.04.2006 to 03.09.2006. The details of the invoices and the details of bills etc. are in Annexure A, to show-cause notice. Show-cause notice dated 28.12.2010 was issued on the appellant alleging that the appellant could have availed credit of CENVAT for service tax paid on inputs services availed during the period prior to 01.04.2006 but they chose not to do. The ST-3 returns submitted show that no credit was availed during the prior period when it was received. Instead the appellant have availed the credit on 01.04.2006 that is one month after the Notification dated 1.3.06. According to Revenue, once the notification is rescinded, there can be no legality in availing the benefits allowed by the same. The Notification No. 15/2004 was rescinded on 1/3/06 by Notification No. 2/06. Thus there can be no legitimacy in availing benefit of the same subsequent to 01.03.2006. Accordingly, the appellant was required to show-cause as to why the total amount of Rs. 11,06,479/- credit availed be not disallowed along with interest and further proposal to impose penalty under rule 15 (4) of CENVAT Credit Rules, 2004 read with Section 78 of the Finance Act.
3. The appellant contested the show-cause notice by filing reply. The ground taken by the appellant was that Rule 3 of the CENVAT Credit Rules, 2004 allow the clamant to avail credit pertaining to service tax paid on input service received on or after 10.09.2004 However Rule 4 (7) providing that, the actual utilization of such credit shall be allowed on or after the day on which payment is made of the value of input service and the service tax to the service provider. It was further contended that the appellant have availed CENVAT credit in respect of the services received and utilized in providing taxable output service prior to 01.03.2006 and as such they have only utilized credit which legally accrued to them, as a right, under the previous Notification No. 15/04, subject to fulfillment of Rule 4(7). The show-cause notice was adjudicated by the Additional Commissioner confirming the show-cause notice and further imposing penalty of equal amount of Rs. 11,06,479/- under Section 78 of the Finance Act read with Rule 15 for of the CENVAT Credit Rules, 2004.
The appellant preferred appeal before the Commissioner (Appeals) who vide the impugned order was pleased to confirm the Order-in-Original and rejected the appeal.
4. Being aggrieved the appellant is in appeal before this Tribunal on the ground, among others, that the Commissioner (appeals) have erred in holding that the appellant will not be entitled to take credit for the services received, admittedly, prior to 1.3.2006 but the credit of which has been booked on 01.04.2006. This is against the provisions of the Finance Act read with CENVAT Credit Rules read with the Notification. Admittedly, the appellant was availing the benefit of Notification No. 15/2004 under which it was entitled to CENVAT credit on input services received. Only in view of Rule 4 sub Rule 7 of CENVAT Credit Rules, 2004 which provided that CENVAT credit is to be taken on or after the date of payment, the appellant have taken credit accordingly on 01.04.2006, which cannot be denied. It is further urged that the purpose of Notification No. 1/06 is that CENVAT credit on inputs and input services shall not be availed on services received on or after 01.03.2006. Thus, the interpretation made by the Revenue is incorrect. It is further urged that the appeal is fit to be allowed. The appellant further relies on the CBEC Circular No. 137/72/2008CX dated 21.11.2008, which provides, with respect to the amendment made in the Rules 6 sub Rule 3 of CENVAT Credit Rules, 2004 which contained bar of utilization of credit of more than 20% of the credit availed. The said disability was removed by the said notification and it was further clarified in the CBEC Circular No. 137/72/2008CX, as no lapsing provision was incorporated and that the existing Rules 6 sub Rule 3 of the CENVAT Credit Rules, 2004 does not explicitly bar the utilisation of the accumulated credit, the Department should not deny the utilisation of such a covenant credit by the taxpayer after 01.04.2008. Further, it must be borne in mind that taking of credit and its utilisation is a substantive right of taxpayer under the value-added taxation scheme. Therefore, in the absence of a clear legal prohibition, this credit cannot be denied.
5. The learned Counsel, Shri Bharat Raichandani, also relies on the ruling of the Honble Bombay High Court in the case of Tata Engineering and Locomotive Company Ltd. Vs. Union of India, 2003 (159) ELT 129 (Bombay), wherein the issue before the Hon'ble High Court was that Notification No. 201/79ST provided exemption to all goods on which inputs, components, parts, raw materials under the erstwhile tariff item 68 had been used, from so much of the duty paid on such inputs, raw materials, and/or components, parts, subject to the condition provided therein. The assessee was availing benefit of the said Notification in respect of several items including oil coolants. With effect from 01.03.1986, the Central Government introduced MODVAT scheme replacing the earlier scheme under Notification No. 1/79, wherein assessee was permitted to take set off of duty paid on specified inputs when used in or in relation to specified final products while paying duty on specified final products. In the list of items, vide Notification No. 177/86, coolants was not provided. Accordingly, the unutilised credit lying in the books of the assessee was disallowed to be taken as the brought forward in view of the subsequent notification. The Hon'ble High Court of Bombay held that although on 01.03.1986 inputs like oil & coolants and final products manufactured of such inputs were not included in the Notification issued under Rule 50(7A) of Central Excise Rule, there was no provision incorporated to declare that such credit has lapsed. Relying on the earlier Ruling of the Hon'ble Apex Court in the case of Eicher Motors Ltd. Vs. Union of India 1999 (106) ELT 3 (SC), it was held that there was no provision under the Central Excise Act, 1944 to frame Rules so as to declare such accumulated credit as lapsed. Therefore, the vested right of assessee in respect of unutilised credits on or before 28/2/86 could not be said to have been lapsed, as there was neither specific provision to that effect nor a statutory provision under the Central Excise Act to declare such credit as lapsed. It was further observed, if the Central Government Wanted that the unutilised credits on coolants as on 01.03.1986 should lapse, then they would have passed validating act to that effect as they had done in the case of a new rate on tractors and motor vehicles. Accordingly, it was held that the assessee is entitled to carry forward the unutilised credit in spite of the subsequent Notification not allowing CENVAT credit for the same.
6. The learned A.R. for the Revenue relies on the impugned order. The learned A.R. further submits that Notification is issued under the specific Section of the Act and hence will override provision of Rule 3 of Central Excise Rules, 2004.
7. Having considered the rival contentions, I hold that the appellant have rightly taken credit for the input services received and availed admittedly prior to 01.03.2006 although credit for the same have been taken on 01.04.2006, subsequent to coming into force of Notification No. 1/06, following the ruling of the Hon'ble High Court of Bombay in the case of Tata Engineering & Locomotive Company Ltd. (supra). The intention of the Government is also express, that it is not to disallow the CENVAT credit for the previous period as there is no such specific bar in the subsequent Notification No. 1/2006. This view is further fortified by the view taken by CBEC Circular with respect to brought forward CENVAT credit under Rule 6 sub Rule 3 when the disability of utilisation of 20% was removed.
8. Thus, the appeal is allowed and the impugned order is set aside. The appellant will be entitled to consequential benefits in accordance with law. As I have decided the appeal on merits in favour of the appellant, I have not entered into the question of limitation. The said question is left open.
(Pronounced in open Court) (Anil Choudhary) Member (Judicial) Sp 7