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2020 (1) TMI 69 - CESTAT KOLKATACENVAT Credit - Service rendered or not - recovery of service tax / credit from the Input Service Distributor (‘ISD’) - foreign loan arranged by Axis Bank for the appellant was subsequently cancelled on request of the appellant - Reverse charge mechanism - liability to pay service tax under Reverse Charge Mechanism (RCM) of which credit is availed for payment of output central excise duty on final products - foreign remittance made by appellant for availing External Commercial Borrowings - HELD THAT:- No amount of service tax has been paid by appellant for which credit has been availed - the Bank has accepted the request of assessee for cancellation of loan facility. However, there is no mention that service tax amount has been refunded back to appellant. In fact, it is specifically stated that the arrangement fee collected by the Bank would not be refunded but may be adjusted when other loan facility is made available to appellant in future. Therefore, the observation made by the learned Commissioner for denial of credit that service tax amount has not been paid by appellant is purely on assumption basis. The fact that processing for loan financing has been done by the Bank is not in dispute. Therefore, the Bank has rendered the service of loan processing which has been duly received by the appellant. Had there been no rendition of service, the question of service tax levy would not have arisen. Duty demand consequent to denial of credit cannot be raised from an ISD Demand of service tax on RCM - HELD THAT:- Since the appellant has chosen not to contest the issue, the demand of ₹ 63,207/- is upheld - Penalty imposed under Section 77 is however set aside by extending the benefit of Section 80 of the Act. Appeal allowed in part.
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