By TIOL News Service

MUMBAI, JULY 22, 2016: THE appellants were engaged in projects on turnkey basis as well as projects undertaken on supervision and labour cost basis. In respect of projects undertaken on turnkey basis, the appellants were availing benefit of Notification No. 1/2006-ST. Further, in respect of a project undertaken on supervision and labour cost basis, the appellants availed CENVAT Credit.

Revenue denied benefit of the Notification No. 1/2006-ST on the ground that the appellant had availed CENVAT Credit.

They refer to the following proviso in the notification -

"Provided that this notification shall not apply in cases where:-

(i) the CENVAT Credit of duty on inputs or capital goods or the CENVAT Credit of Service Tax on input services, used for providing such taxable service, has been taken under the provisions of the Cenvat Credit Rules, 2004 ."

The Commissioner (A) upheld this order.

Aggrieved, the appellant is before the CESTAT and argues that the restriction regarding availing of the CENVAT Credit is only in respect "such taxable services" on which the benefit of Notification No. 1/2006-ST has been availed and not in respect of other services in respect of which Notification No. 1/2006-ST has not been availed. Reliance is placed on the decision in Bharat Heavy Electricals Ltd. – 2012-TIOL-348-CESTAT-MUM.

The AR emphasized that the demand has been confirmed not only on the above ground but also on the ground that the appellants have not been able to prove that the credit has been availed only in respect of services on which benefit of Notification No. 1/2006-ST has not been availed.

The Bench observed that the issue is squarely covered by the decision of Bharat Heavy Electricals Ltd. (supra).

After extracting paragraph 4.2 of the said order, the Bench observed –

"…, it is clear that the appellants can avail Notification No. 1/2006-ST, so long as in respect of such projects, no CENVAT Credit is availed. The appellants are free to avail CENVAT Credit in respect of projects on which Notification No. 1/2006-ST has not been availed. However, the assertion of the appellant that the credit was availed only in respect of project on which Notification No. 1/2006-ST has not availed, needs verification. In view of the above, the impugned order is set aside and the matter is remanded to the original adjudicating authority for verification of facts and order in light of above findings…."

The appeal was allowed by way of remand.

(See 2016-TIOL-1818-CESTAT-MUM)