Service Tax
TRT-2025-
Cestat Ahmedabad
Date:-19-06-23
In:-
Issue Favourable to Tax Payer ?:-
Order Date – 19 June 2023
Parties: Commissioner of Central Excise & ST, Rajkot Vs Galaxy Diesel & Electricals
Facts –
- The Respondent, Galaxy Diesel & Electricals, have not maintained separate account in respect of input service used for exempted goods, thus it was alleged that they are liable to pay the amount at the rate of 8%/6%/5% in terms of Rule 6(3) of Cenvat Credit Rules, 2004.
Issue –
- Whether demand of 8%/6%/5% in terms of Rule 6(3) of Cenvat Credit Rules, 2004 is in order?
Order –
- The Tribunal observed that on this issue much water has been flown and in various cases, the Courts and Tribunal held that once the Cenvat credit of the common inputs used in relation to exempted service is reversed along with interest, the demand of 8%/6%/5% in terms of Rule 6(3) will not sustain.
- Further the Commissioner has also taken support from one of the land mark judgment in the case of Chandrapur Magnet Wires Pvt. Limited vs. CCE, Nagpur – 1996 (81) ELT 3 (SC) wherein it was held that even though the modvat credit was availed but subsequently the same is reversed along with interest situation become as if no Cenvat credit is availed. Accordingly, the benefit of notification was extended.
- Thus it was held that the demand of 8%/6%/5% cannot be made in the facts of the present case when the respondent has admittedly paid back the entire Cenvat credit along with interest which was partly attributed to exempted service. Therefore, the demand is not sustainable.
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