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Rule 9(1)(bb) of CCR, 2004 does not have retro effect - provisions of rule 9(1)(b) does not apply to supplementary invoices issued in Aug, 2008 in respect of ST paid - applicant has made case for total waiver of dues: CESTAT

By TIOL News Service

MUMBAI, FEB 22, 2013: THE applicant received Input service in the month of August, 2008 but the service provider did not pay the Service Tax due.

Later on, the service provider paid the service tax and issued a supplementary invoice in this regard. The service tax was reimbursed by the applicant and they took the CENVAT credit of the same.

It is the case of the Revenue that the credit so availed is improper in terms of rule 9(1)(b) of the CCR, 2004 which prohibits availment of credit on the basis of supplementary invoices if the duty/tax has been paid (on being pointed out) and which was recoverable on account of non-levy/short-levy on the ground of suppression, willful misstatement etc.

The applicant is before the CESTAT against this denial of CENVAT credit of Rs.19,71,599/- and submits that the provisions which the Revenue seeks to invoke pertain to "inputs" and that the provisions of Rule 9(1)(b) do not bar availment of Credit in respect of "Service Tax" paid. It is further submitted that a similar provision numbered 9(1)(bb) was inserted by notification 13/2011-CE(NT), dated 31.03.2011 w.e.f 01.04.2011 in the CCR, 2004; that since during the period when the CENVAT credit was availed by them there was no prohibition in force, the credit has been correctly taken by them. Reliance is also placed on the decisions in L.G.Balakrishnan & Bros Ltd vs CCE - (2010-TIOL-949-CESTAT-MAD) and JSW Steel Ltd vs CCE - (2008-TIOL-2351-CESTAT-MAD).

The Revenue representative justified the order of the lower authority and submitted that the provisions of Rule 9(1)(bb) though introduced from 1.4.2011 the intention was to debar such credit for the earlier period also.

The Bench observed -

"5. We find that the Show Cause Notice was issued for denial of the credit in view of the provisions of Rule 9(1)(b) of the CENVAT Credit Rules. We find that the provisions of Rule 9(1)(b) of the CENVAT Credit Rules were not applicable on the credit of service tax during the period. We therefore find that the applicant has made out a case for total waiver of the dues. Therefore, the pre-deposit of the dues is waived and recovery thereof stayed for hearing of the appeal."

In fine, the Stay petition was allowed.

Time and tide wait for none!

(See 2013-TIOL-347-CESTAT-MUM)


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