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2024 (1) TMI 523 - AT - Service TaxEligibility to avail and utilise the input service credit on various services availed - invocation of extended period in terms of proviso to Section 73(1) of the Finance act, 1994 - imposition of penalties under Section 76, 77 and 78 of the Finance Act, 1994. Eligibility of CENVAT Credit on input services availed - HELD THAT:- In the case of M/S. RUKMINI INDUSTRIES VERSUS THE COMMISSIONER OF CENTRAL EXCISE, HYDERABAD-I [2014 (7) TMI 921 - ANDHRA PRADESH HIGH COURT], it was held that there is no specific rule rendering manufacturer ineligible for availing MODVAT credit when such manufacturer is involved in suppression of turnover or clearance of goods out of record and benefit of MODVAT credit to the extent of input utilized in manufacture of dutiable finished product cannot be denied under Rule 57B of erstwhile Central Excise Rules, 1944. In DHANANIWALA TEXTILES PVT. LTD. VERSUS COMMR. OF CUS. & C. EX., HYDERABAD [2000 (12) TMI 158 - CEGAT, CHENNAI], it was held that the order of denial of MODVAT Credit is not correct in law when duty paid goods were used in the manufacture of dutiable final products. The law under CENVAT Credit Rules, 2004, does not say that the adjustment of Credit is not to be allowed, if the returns are filed belatedly. On such score, disallowance of credit is not legal and proper. Eligible credit has to be allowed for adjustment to compute the assessee’s tax liability. However, the amount of credit has to be verified. The assessee has furnished the table showing the details of the credit available. Even as per Audit report, it was informed that they are eligible for CENVAT Credit. However, we are of the opinion that matter of computation on CENVAT Credit eligible needs to be remanded to the original adjudicating authority for the limited purpose of verifying the amount of credit as furnished in the table and allow the adjustment towards liability. As such, the lower adjudicating authority is directed to requantify the duty liability after adjusting the CENVAT Credit amount. Invocation of extended period of limitation - HELD THAT:- The non-payment of Service Tax collected along with the link charges from the cable operators had resulted in undue financial accommodation and therefore the suppression indulged has all necessary elements to be considered as having been resorted to with intent to evade payment of Service Tax. In such a situation extended proviso is rightly invokable as held by the CESTAT, Mumbai in the case of M/s. Safe & Sure Marine Service Pvt. Ltd. Vs. Commissioner of Service Tax, Mumbai [2012 (4) TMI 56 - CESTAT, MUMBAI] wherein it was held interalia “that the appellant, after having collected the tax from their customers, have never informed the Department of the same and have suppressed facts from the Department and, therefore, the extended period of time has been rightly invoked in the instant case. The above ratio is squarely applicable in this case”. Considering the facts and circumstances of this case and relying upon the above decision, there are no hesitation to hold that the extended period of limitation in terms of the proviso to Sub-Section (1) of Section 73 of Chapter V of the Finance Act, 1994 is rightly invokable in this case. Penalties - HELD THAT:- Considering the peculiar circumstance of the case as the appellant has paid substantially the Service Tax amount before the issuance of the Show Cause Notice No. 25/2011 dated 18.04.2011, it is sufficient cause to waive the penalties imposed under Section 76 of the Finance Act, 1994 in terms of provisions of Section 80 of the Finance Act, 1994 in respect of both the Show Cause Notices - penalties imposed under Section 77 of the Finance Act, 1994 are not disturbed. The original adjudicating authority is directed to arrive at the Service Tax payable after allowing the adjustment of CENVAT Credit eligible. Thus, the appeal filed by the assessee is partly allowed and partly remanded.
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