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M/s. Travel Inn India Pvt. Ltd. Versus C.S.T., Delhi

2015 (6) TMI 626 - CESTAT NEW DELHI

Denial of the benefit of abatement Notification No.1/2006-ST, dated 01.03.2006 - Availment of CENVAT Credit - Held that:- f the assessee has reversed the Cenvat credit availed along with interest, the same shall amount to non-availment of Cenvat credit. Consequently, the assessee is entitled for the benefit of exemption Notification No.1/2006-ST ibid. Admittedly, in this case the appellant has reversed the Cenvat credit of their own. On being realisation that they are not entitled to take the Ce .....

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lised on a later date. Therefore, the date of deposited the cheque into the treasury is the date of payment of service tax as per Rule 6(2A) of the said Rules. In these circumstances, we hold that the appellant has paid the service tax in time. Consequently, demand of interest on delayed payments is not sustainable. - Decision in the case of Khyati Tours & Travels [2011 (6) TMI 324 - CESTAT, AHMEDABAD] followed - Decided in favour of assessee. - Appeal No. ST/580/2009-CU[DB] - Final Order No. 51 .....

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12,138/- under Section 75 of the Finance Act, 1994 for delayed payments. 2. The facts of the case are that the appellant is providing tour operator service during the period 2005-06 to 2006-07, the appellant was availing certain input services for providing output services and taking Cenvat credit thereon. With effect from 01.03.2006, Notification No.1/2006-ST was introduced which granted exemption of taxable services specified in sub-clause (n) of clause (105) of Section 65 of the Finance Act t .....

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availing Cenvat credit, the appellant immediately deposited the amount of Cenvat credit availed during the period April, 2006 to March, 2007 along with interest on 03.10.2007 and intimated to the Department on 04.10.2007. On doing this, the Revenue issued two Show Cause Notices to the appellant on 15.02.2007 and 25.02.2008 respectively to deny the benefit of Notification No.1/2006-ST and consequently demanded the service tax along with interest and equivalent amount of penalty was imposed. In t .....

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ellant appeared and submits that it is not a case of detection of availment of inadmissible Cenvat credit by the appellant by the Department but the appellant themselves realised that they are availing Cenvat credit, consequently they are not entitled for the benefit of the Notification No.1/2006-ST. Therefore to avail the benefit of the above Notification, they their own calculated the amount of inadmissible Cenvat credit and paid thereof along with interest on 03.10.2007 for the period 01.04.2 .....

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(All.)]. For demand of interest, he submits that as per Rule 6(2A) of Service Tax Rules, 1994, the appellant is not required to pay the interest, as per the said Rule, the appellant has deposited the cheque on the due date and same is the date of payment of service tax subject to realisation of the said cheque. Therefore, the appellant is not required to pay interest as demanded by the adjudicating authority in the impugned order. Therefore, the impugned order is to be set aside. 4. On the othe .....

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Hon'ble Apex Court observed that if the credit has been reversed before the point of taxation then the same shall amount non-availment of the benefit of Cenvat credit. But in this case, the appellant is regular provider of output services and the said credits have been utilised by the appellant for the payment of service tax. Therefore, they are not entitled to avail the benefit of Notification No.1/2006-ST ibid. He further submits that the demand of interest has rightly been confirmed agai .....

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delayed payment of service tax as per Rule 6(2A) of Service Tax Rules, 1994 or not. 7. To decide the issue of availment of benefit of Notification No.1/2006-ST ibid, we find that in this case, the appellant has reversed the inadmissible Cenvat amount along with interest by their own on being realisation. Ld. Departmental Representative has relied on the decision of Chandrapur Magnet Wires (P) Ltd. (supra) to say that if the Cenvat credit has been reversed before utilisation only then they are en .....

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ed for manufacture of such goods. But the Hon'ble Apex Court has not put any bar that if the same has not been reversed before removal of goods, in that case the assessee is required to pay the amount of 5%/10% of the value of the exempted goods. Therefore the observation made by the Hon'ble court only obiter dicta and the Hon'ble Apex Court has also quoted that the said reversal is permissible and assessee is entitled for exemption. Therefore, the facts of the said case are not appl .....

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anufacturer can be treated as not having taken credit on the inputs used in the manufacture of final product, even though it was originally taken but subsequently reversed, has been decided by a five Member Bench of the Tribunal in the case of Franco Italian Company Pvt. v. CCE, 2000 (120) E.L.T. 792. The aforesaid five members Bench of the Tribunal after taking into account the ratio laid down by the Supreme Court in the case of Chandrapur Magnet Wire (P) Ltd. v. CC, Nagpur, 1996 (81) E.L.T. 3 .....

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ide and the appeal of Franco Italian Company (supra) is allowed subject to the conditions that Modvat credit taken of the duty paid on the inputs which were utilised in the manufacture of duty free goods, is reversed. 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 i .....

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ed in the account of the assessee. In such a situation it cannot be said that the assessee has taken credit for the duty paid on the inputs utilised in the manufacture of final exempted product under Rule 57-A. In other words the claim of exemption of duty on the disputed goods cannot be denied on the plea that the assessee has taken credit of duty paid on the inputs used in manufacture of these goods. 22. Hence in our opinion the Tribunal was not justified in taking a view that reversal of the .....

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ument advanced by the ld. Departmental Representative that if reversal is made before point of taxation only then the tax exemption is available is not acceptable to us. Further, we find that a similar issue came before this Tribunal in the case of Khyati Tours & Travels (supra),wherein this Tribunal has observed as under:- 4. It is seen that the appellant had reversed the wrongly availed Modvat credit along with interest, the same will have the effect as if no credit was availed by the appe .....

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The appellant cited the case of M/s. Hello Minerals Water Private Limited v. UOI reported in 2004 (174) E.L.T. 422 (Allahabad). I have gone through this judgment. In Para 18 of this judgment it has been held by the High Court that if the exemption is subject to non-availment of modvat credit on inputs, the subsequent reversal of modvat credit amounts to non-taking of credit on inputs and the benefit of exemption notification number 15/94-C.E., is to be granted, even when reversal of credit on in .....

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down/held that debit entry in modvat credit account indicates as if no credit was taken on such inputs. This judgment has been followed in a number of Tribunal judgments. The latest has been a case of the Commissionerate of Service Tax itself in the case of CST, Ahmedabad v. M/s. Amola Holdings Private Limited. This judgment was given in order No. A/1148/WZB/AHD/09 dated 1-6-2009. This judgment also stands accepted by the Commissionerate and hence I follow the same and hold that reversal or debi .....

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