TaxTMI 
TaxTMI 
2012 (10) TMI 765
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....cted the Service Tax from the customers but not paid the same to the Department, proceedings were initiated. The appellants did not dispute the Service Tax liability but, after issue of Show Cause Notice on 21.06.2007, filed the ST 3 returns for the relevant period, showed the CENVAT Credit on the capital goods as available and debited the same towards payment of Service Tax. In the reply to the Show Cause Notice, they submitted that the respondent was eligible for CENVAT Credit of Excise duty paid on capital goods amounting to Rs. 4,19,322/-, whereas the total Service Tax liability was only Rs. 3,39,378/-. The original adjudicating authority allowed the CENVAT Credit for the period subsequent to 10.09.2004 and held that the respondents ar....
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....nt, the impugned order holding that the respondent should not have debited the CENVAT Credit for payment of Service Tax is not correct and in the absence of any proceedings for denial of CENVAT Credit, the respondent s action in debiting the CENVAT Credit towards payment of Service Tax has to be upheld and therefore no case has been made out by the Revenue for denial of CENVAT Credit. Further, the ld.Counsel also submits that in Order-in-Original which was a culmination of proceedings for recovery of tax, the original adjudicating authority has specifically observed that he has confirmed the demand of Service Tax and appropriated the amount already debited by original adjudicating authority. Since the original adjudicating authority has app....
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.... Transitional provision (1) Any amount of credit earned by a manufacturer under CENVAT Credit Rules, 2002, as they existed prior to 10th day of September, 2004 or by a provider of output service under the Service Tax Credit Rules, 2002, as they existed prior to the 10th day of September, 2004, and remaining unutilized on that day shall be allowed as CENVAT Credit to such manufacturer or provider of output service unless these rules, and be allowed to be utilized in accordance with these rules. 5. However, he has failed to consider the provisions of Rule 3 of Service Tax Credit Rules, which is reproduced here under:- 3. Service Tax Credit: (1) An output service provider shall be allowed to take credit (herein referred to as Service Tax Cre....
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....led, credit has been shown and debits have been made. However, before the returns were filed, Show Cause Notice has already been issued and in reply to the Show Cause Notice, the respondent had already made the claim for CENVAT Credit of duty paid on capital goods which was required to be considered by the adjudicating authority. 8. To my mind, just because the returns were filed subsequently, the requirement under the law for the adjudicating authority to consider availability of CENVAT Credit and allow the benefit of admissible CENVAT Credit while confirming the duty demand does not undergo a change. Issue of another Show Cause Notice to deny the CENVAT Credit would only open a line for another round of litigation without any correspondi....
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....eated as an appeal. After going through the memorandum or cross objection, I am inclined to agree with the submissions made by the ld.Counsel that the claim of the respondent that there was no intention to evade duty since they were eligible for credit of duty paid on capital goods has to be accepted. Once the claim that the CENVAT Credit was available and respondent s omission was only in following the procedure, assessee s claim for the benefit of provisions relating to imposition of penalty under Section 80 of Finance Act, 1994 has to be considered favourably. Therefore, to the extent of availability of CENVAT Credit on capital goods to the respondent, penalty under Section 78 has to be waived. Accordingly, by invoking the provisions o....