In a major setback to Rosy Blue India Pvt Ltd, the Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ), confirmed rejection of Cenvat Credit of Rupees 51 lakhs.
The appellant, Rosy Blue India Pvt Ltd trading internationally in diamonds and other precious stones, also claimed to have rendered service to overseas clients and having utilized ‘taxable service’ on which credit of tax under Finance Act, 1994, as permissible, was availed and, owing to absence of domestic dealings, was constrained to opt for monetization of such credit attributable to services deployed for undertaking export of services during the relevant quarter as provided for in rule 5 of CENVAT Credit Rules, 2004.
The sanctioning authority, taking note of the several conditions in notification no. 27/2012/CE (NT) dated 18th June 2012 for operationalising monetization of eligible credit under rule 5 of CENVAT Credit Rules, 2004 and essentiality of paragraph 2(h) espoused in the remand order of the first appellate authority, to hold insufficiency of compliance with the said condition and rejected the claim for sanction of Rupees 51 lakhs for the three quarters.
The appellant was not aggrieved by the curtailment of credit available for monetizing butonly by the rejection of the truncated eligibility.
The provisions in the notification for operationalizing of rule 5 of CENVAT Credit Rules, 2004 include debiting of the claim amount before submission of application for the same. There is a purpose behind this mandate: that the claimed amount would be erased from the credit account and, thus, not utilised even temporarily once monetization has been sought.
The appellant has not clearly produced evidence of, having retained that amount in balance all through. There is also no doubt that the lower authorities, in proceedings pursuant to the remand order, have come to the conclusion that not carrying forward the balance of credit in the returns pertaining to the said period is not sufficient for accepting the claim of the appellant that procedural requirements had been complied with
A Coram consisting of C J Mathew, Technical Member and Ajay Sharma, Judicial Member observed that “The appellant is, squarely and singularly, responsible for failure to furnish proof of the required availability of credit till the date of write off and, in the absence of any such evidence even at this stage of appeal or even assurance of being ready and willing to do so, there is no scope for further ascertainment.”
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