By TIOL News Service

MUMBAI, AUG 04, 2014: A demand of Rs.1.01 crore was confirmed by the CCE, Mumbai-I along with penalties and interest against the service tax assessee.

The appellant is before the CESTAT and submits that -

+ During the year 2008-09 the appellant availed CENVAT credit on input services used in the rendering of dutiable as well as exempted services. However, they reversed the CENVAT credit attributable to the exempted services as per the procedure. Inasmuch as the turnover of the exempted services amounted 90.60% of the total turnover, the same was rounded off to 90% and the credit was reversed accordingly.

+ In the subsequent year i.e., 2009-10, the appellant reversed CENVAT credit at 87% of the total credit taken whereas the credit attributable to the exempted services amounted only to 86.57%. This was also done due to rounding off.

+ The excess credit availed in 2008-09 amounted to Rs.1.01 crore while the short credit availed during the year 2009-10 amounted to Rs.1.11 crore.

+ It is submitted that it was only due to rounding off, the excess taking of credit or the short-taking of credit arose, and there was no intention on the part of the appellant to evade any service tax and, therefore, if the excess credit taken during the year 2008-09 is adjusted against the short-credit taken during 2009-10, there would be no loss of revenue to the exchequer.

+ The ground of limitation is also taken.

The Revenue representative submitted that Rule 6(3A) of CCR, 2004 does not have any provision for adjusting the excess credit taken in a particular year with the short credit taken during the subsequent year; the appellant needs to be put to terms.

The Bench observed that the mistake occurred only due to rounding off of the percentages of the credit to the nearest decimal; there is no evidence forthcoming from the records that the taking of credit was on account of any intention to evade service tax; the SCN has been issued invoking the extended period of time.

Holding that the appellant has made out a prima facie case on account of time-bar, the Bench granted unconditional waiver from pre-deposit of the dues adjudged and stayed the recovery.

(See 2014-TIOL-1414-CESTAT-MUM)