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TMI Blog2018 (12) TMI 371X X X X Extracts X X X X X X X X Extracts X X X X ..... l as service tax paid on input services. Department on the basis of an observation while scrutinising their records alleged that the appellants have wrongly availed the cenvat credit on service tax amounting to Rs. 75,104/- on Rs. 7,29,165/- which was recovered against liquidated damages from the service provider during the period w.e.f. April 2010 to December 2010 in contravening of Rule 3(1) & 4(7) of Central Excise Rules, 2004 (CCR hereinafter). Resultantly, a Show Cause Notice dated 28.04.2011 was issued to the appellant proposing the recovery of Rs. 75,104/- being the proportionate cenvat credit pertaining to the amount adjusted from the invoices as liquidated damages. The interest in terms of Rule 14 of CCR and Section 11AB of Central ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ua the said Circular. It is submitted that violation of Rule 4(7) of CCR has wrongly been alleged. 3.1 Appellant further submitted that the eligibility to take cenvat credit on the amount of service charges adjusted as liquidated damages has already been settled in appellant's own case for the earlier period of 2006-07 to 2009-March 2010 vide the Final Order No. 55702-55703/2016 dated 24.11.2016. The period in dispute is the immediate subsequent period i.e. w.e.f. April 2010 to December 2010. It is further impressed upon that for the period subsequent to the period in dispute even the Commissioner has dropped the demand. Even Circular No. 877/15/2008 dated 17.11.2008 as has been relied upon by the Commissioner(Appeals) in support of the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh Court at 2015 (321) ELT 448 (Mad.)] 4. While rebutting these arguments, Ld. DR has impressed upon that the liquidated damages as retained by the appellant in the present case are in the nature of permanent deduction from the invoice amount arising on account of non performance of the service up to the standards stipulated between the service provider and the service recipient herein. Hence, the final payment of the bill will only be after deducting the said liquidated damages. Resultantly, the authorities below have rightly confirmed the violation of Rule 4(7) of CCR on the part of the appellant. As per Circular 877 dated 17.11.2008 it is clear that if the duty is reduced that the reduced excise duty would only be available as credit. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and (ii) ----- Rule 4 reads as follows:- Rule 4 Conditions for allowing CENVAT credit - (1) The CENVAT credit in respect of inputs may be taken immediately on receipt of the inputs in the factory or the manufacturer or in the premises of the provider of output service. Rule 4(7) reads as follows:- The Cenvat credit in respect of input service shall be allowed, on or after the day which payment is made of the value of input service and the service tax paid or payable as is indicated in invoice, bill or, as the case may be, challan referred to in rule 9. Section 67 of the Finance Act, 1994 is relevant for valuation of taxable services for charging service tax which reads as follows: 67 Valuation of taxable services for charging ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion has come up for which the said Notification: 5b) In the cases where the receiver of service reduces the amount mentioned in the invoice/ bill/ challan and makes discounted payment, then it should be taken as final payment towards the provision of service. The mere fact that finally settled amount is less than the amount shown in the invoice does not alter the fact that service charges have been paid and thus the service receiver is entitled to take credit provided he has also paid the amount of service tax, (whether proportionately reduced or the original amount) to the service provider. The invoice would in fact stand amended to that extent. The credit taken would be equivalent to the amount that is paid as service tax. However, in ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uent to raising the invoice the credit can still be availed on the duty paid in accordance of the amount shown in the invoice. This finding is opined to be sufficient to hold that the findings of Commissioner(Appeals) are erroneous on the face of it. There has been plethora of decisions of this Tribunal as has been relied upon by the appellant, even in their own case vide which the issue in hand is held to no more be res integra. Rather the Hon'ble Apex Court also in case of C.C.E., Bholpur Vs. Ratan Melting & Wire Industries 2008 (12) STR 416 has held that there is nothing in Circular No. 122 dated 30.04.2010 which is contrary to provisions of Finance Act, 1994 or of the Rules made there under. The same is absolutely binding on the Departm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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