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2019 (12) TMI 557 - AT - Service TaxCENVAT Credit - input services - pure agent services - it was alleged that the appellants have availed ineligible cenvat credit in as much as the appellants have not paid service tax on the entire amount of incidental expenses recovered from VML - Board’s Circular F. No. 137/85/2007- CX.4 and No.97/8/2007 dated 23.08.2007 - penalty - HELD THAT:- It is an admitted fact that on certain services procured by the appellant for M/s. VML, where also the invoices were in the appellant’s name, but they have claimed full reimbursement from M/s.VML by further adding their service charges. Admittedly, the appellants have paid service tax (output tax) only on the service charges/mark-up made by them or levied by them. Thus, it is held that such services will not form part of input services under Rule 2 (l) of Cenvat Credit Rules for the appellant. However, on other input services, where the appellant have not recovered the amount of service charges plus service tax by way of reimbursement, they shall be entitled to cenvat credit. Penalty - HELD THAT:- The issue is wholly interpretational in nature and there is no element of contumacious conduct or suppression of facts. Admittedly, all the transactions are duly recorded in the books of accounts ordinarily maintained. Further, the appellants were registered with the Department and have been regularly complying including filing periodical returns - Accordingly, the penalty imposed under Rule 15 of Cenvat Credit Rules read with Section 78 of the Finance Act is set aside. Appeal allowed in part.
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