By TIOL News Service

MUMBAI, MAY 04, 2016: THE appellants are providing taxable services as well as exempted services of water supply and sprinkling of water to suppress dust of coal at Jaigad Port. These services are exempted from payment of service tax vide Notification No. 31/2010-ST dated 22 nd June 2010.

Alleging that the appellant is availing Cenvat credit in respect of common input services which are used in respect of taxable service as well as the aforesaid two exempted services, a SCN was issued seeking recovery of amount of 6% in terms of Rule 6(3) of CCR, 2004.

As the lower authorities confirmed the demand, the appellant is before the CESTAT.

It is submitted that in the SCN no evidence is adduced that the appellant had ever taken Cenvat credit in respect of common input services. Moreover, in respect of exempted services no taxable services were used and, therefore, there is no question of availing Cenvat credit. Inasmuch as demand under Rule 6(3) cannot sustain.

The AR while reiterating the findings of the lower authorities emphasized that the appellant had not submitted any evidence right from reply to the show cause notice till the present date that the services, in respect of which the Cenvat credit was availed, were used in the exempted services or otherwise. Therefore, their submissions cannot be accepted.

The Bench observed -

+ Rule 6(3) can be made applicable only when assessee availed the Cenvat credit in respect of common input services which is used in taxable as well as exempted services. If the common input service is not used in the exempted service demand under Rule 6(3) cannot be made.

+ However in the present case the show cause notice has not adduced any evidence to show that the appellant have availed the Cenvat credit on the services which were used in taxable as well as exempted services.

+ Similarly, the appellant also have not produced any evidence either to the Adjudicating authority or to the Commissioner (Appeals) that on which services they have availed the Cenvat credit and whether such services were not used in exempted services. Therefore since vital fact has not come on record, matter needs to be remanded to the Original Adjudicating authority.

+ The appellant was directed to provide documentary evidence to prove that services on which they have availed Cenvat credit were not used for providing aforesaid two exempted services.

The appeal was disposed of by way of remand.

(See 2016-TIOL-1063-CESTAT-MUM)