TMI Blog2022 (4) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... erusing the ST-3 returns as well as the details of the calculations given by both sides, the appellant has no further liability to reverse the credit for the disputed period. The matter was adjourned to understand the confusions in the calculations in the Show Cause Notice and order passed by the original authority - Appeal allowed - decided in favor of appellant. - Service Tax Appeal No.40800 of 2021 - Final Order No. 40128/ 2022 - Dated:- 31-3-2022 - Ms. Sulekha Beevi C.S., Member (Judicial) Shri T.R. Ramesh, Advocate for the Appellant Shri Arul C. Durairaj, Superintendent (AR) for the Respondent ORDER Brief facts are that the appellants are authorized dealers for sale of automobiles and accessories of M/s. Maruti Suzuki Ltd. and are registered with the Service Tax Department. During the course of verification of records, it was observed that the appellants are engaged in promotional activities like advertising and display to promote the vehicles of M/s. Maruti Udyog Ltd. They also promoted and marketed insurance and financial products of banks and financial institutions for which they receive commission. It was noticed from the ST-3 returns that the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . He submitted that in the remand denovo adjudication, the appellant submitted before the original authority that during the period October 2010 to March, 2011, the appellant has taken credit in respect of services covered under Rule 6(5) of CENVAT Credit Rules, 2004 as it stood during the material period. That therefore no reversal of credit is required in respect of the security services and maintenance services. Further, the appellant submitted that the demand made in the Show Cause Notice to the tune of ₹ 4,76,362/- is an inflated one. Even as per Annexure I to the Show Cause Notice, the appellant has taken CENVAT credit of ₹ 46,387/- for the period October 2010 to March 2011 and eligible for ₹ 61,644/- but utilized ₹ 21,903/- for the period April 2011 to September 2011. Thus, the demand of ₹ 4.76 lakhs is wholly unsustainable which does not reckon with the CENVAT credit taken (not the accumulated balance) during the financial year. The working of the adjudicating authority to arrive at the credit that has to be reversed is erroneous. Further, for the Financial Year 2011 12, the appellant had worked out the formula prescribed under Rule 6(3A) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ufficient evidence to show that the appellant has reversed a sum of ₹ 14,41,35/- for the period October 2010 to March 2011 and also has reversed a sum of ₹ 4,12,547/- for the period April 2011 to September 2011. The appellant has thus made total reversal of ₹ 18,53,982/0 which is much higher than the amount arrived by the original authority which is only ₹ 3,70,181/-. He prayed that the appeal may be allowed. 7. The learned AR Shri Arul C. Durairaj appeared for the respondent. Since the dispute in this appeal is with regard to calculation of the amount of credit that has to be reversed by the appellant, the learned AR has taken effort to bring out the details of the credit availed as well as the amount reversed by the appellant during the disputed period. The details given by the learned AR are as under:- The abstract of CENVAT credit availed during the period of dispute is split up return wise for ease of understanding as the CENVAT figures reflected in the return for the two periods is different: 2. Return Period October 2010 to March 2011: (Reference SCN Annexure I II page 51 52) Month Taxable Value (T1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00 10,573.00 Aug-11 8,08,097.00 97,64,872.00 76,756.00 66,778.00 9,978.00 Sep-11 16,19,968.00 91,31,816.00 75,343.00 65,549.00 9,794.00 Total 51,20,401.00 6,22,47,120.00 4,74,191.00 4,12,547.00 61,644.00 The correct calculation of the demand for the entire period of dispute should have been as follows: (E1+E2) x (C1+C2)/ (T1+E1+T2+E2) = (70,39,19,824 + 6,22,47,120) x (3,76,629 + 4,74,191) / (82,25,769 + 70,39,19,824+51,20,401 + 6,22,47,120) Which will result in ₹ 8,36,253 as amount quantified to be reversed under Rule 6(3) As an amount of ₹ 4,12,547 had already been reversed, the balance payable would have been ₹ 4,23,706. However, the show cause notice demand was calculated on the basis of figure at Column NC2 and thereby the demand was wrongly arrived as follows: (E1+E2) x (C1+NC2) / (T1+E1+T2+E2) = (70,39,19,824+6,22,47,120) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... E1 x C1 ---------- E1 + T1 70,39,19,824 x 3,76,629 ------------------------------ 70,39,19,824 + 82,25,769 = ₹ 3,72,279 6. Therefore, neither the SCN where the demand was calculated over the entire period of dispute nor the O-in-O where the demand has been calculated over different periods have quantified at the demand correctly. 7. The appellant has not carried forward the CENVAT credit closing balance of ₹ 14,41,435 in the return for the period ending March 2011 to the return for the period April to October 2011. This is clearly an omission and not a conscious decision to reverse disputed credit. However, the fact of this omission extinguishes the credit reversal liability for the period October 2010 to March 2011. 8. Heard both sides. 9. The question is whether the appellant has complied with Rule 6(3A) of CENVAT Credit Rules, 2004 by reversing the proportionate credit used for exempted services. From the submissions made by both sides as well as the detail calculation given by learned AR, it can be seen that the appellant has not carried forward the CENVAT credit closin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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