No Denial Of Abatement if Minor Incorrect Cenvat Wrongly Availed and Reversed Later
M/s. Punj Lloyd Ltd. Versus C.C.E. &S. T., Rohtak | 2015 (10) TMI 2294 - CESTAT NEW DELHI
Facts of the Case
Out of the said impugned demand, demand of ₹ 13,99,74,736/- for the period 01.04.2006 31.03.2007 has been confirmed on account of denial of 67% abatement under notification No. 1/2006-ST, dated 01.03.2006 on the ground that the appellant had taken CENVAT credit of input services.
The appellant has contended that (i) when Notification No. 15/2004ST was replaced by Notification No. 1/2006-ST, dated 01.03.2006 an additional condition of non-availment of CENVAT credit on input services was also introduced and due to oversight they took CENVAT of input services amounting to ₹ 32,59,779/-. The said amount was reversed along with interest even before the impugned order and therefore in the light of the judgement of Allahabad High Court in the case of Hello Minerals Water (P) Ltd. Vs Union of India [2004 (174) ELT 422 (All)], it was entitled to the benefit under Notification No.1/2006-ST.
In terms of the judgement of Supreme Court in the case of Chandrapur Magnet Wires Pvt. Ltd. Vs. CCE, Nagpur [1996 (81) ELT 3 (SC)], the exemption under Notification is subject to the condition of non-availment of CENVAT credit and can be granted only if the CENVAT credit is reversed before the clearance of the goods and CESTAT in the case of Hind Lamps Vs. CCE, Kanpur [2010 (250) ELT 237 (Tri.-Del)] has distinguished the case of Hello Minerals (supra) to hold that CENVAT credit should have been reversed before the due date of payment of service tax.
As regards the eligibility for the benefit of Notification No. 1/2006-ST after reversal of the CENVAT credit taken on input services along with interest, it needs to be appreciated that in the notification No. 15/2004-ST there was no bar against taking CENVAT credit of input services. When the said notification was superseded by Notification No. 1/2006-ST an additional condition of non-availment of CENVAT credit on input services was also introduced. It is thus possible that initially this may have escaped the attention of the appellant. No prudent person would take the risk of being saddled with a demand of almost ₹ 14 crores merely for input service credit of just above ₹ 32 lakhs. As regards the possible argument that there is no equity in taxation and exemption Notifications have to be construed strictly, suffice to say that in the case of Hello Minerals (supra) the Allahabad High Court has clearly held as under:-
18. In view of the above decision we are of the opinion that reversal of Modvat credit amounts to non-taking of credit on the inputs. Hence the benefit has to be given of the notification granting exemption/rate of duty on the final product since the reversal of the credit on the input was done at the Tribunals stage.Without dwelling further on the subject, we may only add that as on today the judgement of Allahabad High Court in the case of Hello Minerals (supra) continues to be good law with regard to the subject at hand and has been repeatedly followed by CESTAT, e.g., in the case of Hindustan Construction Co. Ltd. Vs. CST, Mumbai (Order No.S/924/14/CSTB/C-I, dated 03.09.2014), B.G. Shirke Construction Tech. Vs. CCE, Pune [2009 (13) STR 683 (Tri.-Mum.)] and Khyati Tours & Travels Vs. CCE, Ahmedabad [2012 (27) STR 366 (Tri. - Ahmd.)]. As such we hold that the component of impugned demand arising as a result of denial of the benefit of Notification No. 1/2006-ST is not sustainable
Note:- The Judgement shall be infered strictly in light to the applicable facts and law on the appellant.