CENVAT Credit Claim not to be Rejected without giving Chance to Produce Documents, Demand Order Invalid: CESTAT [Read Order]

The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that, the CENVAT credit claim of the appellant, Britt Worldwide India Pvt. Ltd. was rejected arbitrarily as a chance to produce relevant documents was not given and set aside the demand order of the Commissioner of Central Excise and Service Tax, Pune.

The Commissioner had imposed a penalty of Rs. Seven Crores Sixty One Lakhs Eighty Nine Thousand Five Hundred and Fourteen Only] on M/s. Britt Worldwide India Pvt. Ltd., Navi Mumbai, under the provisions of Section 78 of the Finance Act,1994, as amended.

According to Bharat Raichandani, appearing on behalf of the appellant, In the impugned order, it has been held that the appellants did not pay tax knowing their output service is liable to tax which is nothing but a deliberate act with intent to evade payment of service tax.

It was also submitted that, “It has been held that a larger period of limitation is invokable in the instant case The question is one of, admittedly, interpretation of the section and the notification. The period involved in the appeal is one of the nascent stages of the levy. If two views are possible, the appellant cannot be held to be guilty of suppression.”

On behalf of the revenue, it was submitted that the programmes conducted by the assessee are not vocational training programs as it is not imparting any skills and for seeking self employment but specialized training and product information as well as the business training. These training programs are only recognised by Amway and not recognised under law.

Deputy Commissioner Nitin Ranjan, also submitted that the applicant was actually imparting training and education to Amway Business Owners with a motivating profit by charging ticket fare from participants.

As per Section 65(27) of the Finance Act, 1994, commercial training and coaching centers mean any institute establishment providing commercial training and coaching for imparting skill or knowledge on lesson on any field as evidence was with without issuance of certificate includes coaching water tutorial classes but does not include personal coaching and training institutes for any institute for establishment we should issues any certificate for diploma degree or any educational qualification recognised by law for the time being in force.

Here, the Revenue submitted that the appellant does not fall into any of the said categories.

In respect of the CENVAT Credit it was observed that the Commissioner has held that the appellant has failed to establish the claim to CENVAT Credit and that this observation has been made by the commissioner following the decision of Hon'ble Apex Court, was not applicable in the present situation.

It was thus held by the CESTAT Bench of Technical Member Sanjiv Srivastava and Judicial Member Suvendu Kumar Pati that,  “Commissioner could have allowed the opportunity to the appellant to produce the documents against which they intended to claim the CENVAT Credit and then decide upon the eligibility to the same”, thereby quashing the demand and subsequent penalty and interests.

To Read the full text of the Order CLICK HERE

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