Manufacturer can claim Cenvat Credit of Service Tax payable under RCM: CESTAT deletes Penalty [Read Order]

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) New Delhi, while deleting a penalty order, held that the Company involved in manufacturing and clearing dutiable goods can claim cenvat credit of service tax payable under reverse charge mechanism.

Mr. Anil Chowdhary (Member), Judicial was considering an appeal wherein the assessee company is involved in the manufacturing of dutiable goods and of input services like GTA, Man power supply agency etc.With regard to audit for the period September, 2013 to March it came tk the notice of Revenue that appellant have not discharged service tax liability under reverse charge mechanism on the input services being GTA, Manpower Supply Agency and Security Service  and hence total service tax under three heads under the reverse charge mechanism, demanded for Rs.1,97,054/-.  The show cause notice also showed late filing of ST-3 returns as under Rule 7(C) of Service Tax Rules.  Further, penalty was proposed under Section 76, 77 and 78 of the Act. Further, penalty of Rs.1,97,054/- was imposed under Section 78 and penalty of Rs.20,500/- was imposed for late filing of return under Section 70 read with Rule 7(C).  Further, penalty of Rs. 10,000/- was proposed under Section 77 of the Act. Aggrieved by the order the assessee preferred an appeal. The appellant contended that tjey have filed the periodic returns and hence not liable to pay the penalty and the appellant company had to shut down because of financial crisis. The Learned Commissioner (Appeals) rejected the appeal. Hence the appellant approached CESTAT.

After hearing both the sides the Tribunal came to the conclusion that the Company involved in manufacturing and clearing dutiable goods can claim cenvat credit of service tax payable under reverse charge mechanism and set aside penalty imposed on Appellant Company. The penalty imposed was found to be excessive and hence reduced to Rs 5000/-.

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