Non Availment of Cenvat Credit on Capital Goods: CESTAT quashes Service Tax Demand [Read Order]

Cenvat Credit - Non Availment of Cenvat Credit - Capital Goods - CESTAT - Service Tax Demand - Service Tax - Customs - Excise - taxscan

The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), quashed service tax demand as there was non-availment of Cenvat credit on capital goods.

This appeal is directed against the order whereby the Commissioner (Appeals) upheld the demand of service tax of Rs. Fifty-two thousand with corresponding interest and penalties under the category of Management, Maintenance or Repair services.

The appellant, Harish Tex Mach Pvt Limited, submitted that they have mainly a small-scale service provider and for the period 2005-06, 2006-07, 2007-08 and 2008-09, in each year the threshold limit of appellant’s so-called services were much below the threshold limit of value of exemption under Notification No. 6/2005-ST therefore, the demand is not sustainable on this ground alone.

It is the claim of the appellant that they have not availed Cenvat credit either on the input service or on capital goods. From the show cause notice also it is observed that no such charge of availment of Cenvat credit was made.

The Commissioner (Appeals) denied the exemption on the ground that appellant have failed to fulfil the condition (iii) of the notification that provider of taxable service has availed Cenvat credit on capital goods received during the exempted period.

In terms of Notification No. 6/2005-ST, the exemption was provided upto the aggregate value of Rs. 4 lakhs in the year 2005-06, 2006-07 and Rs. 8 Lakh in the year 2007-08 and 2008-09. Accordingly, the value of taxable services of the appellant in each year was below the threshold exemption limit in terms of Notification No. 6/2005-ST.

The Coram comprising Ramesh Nair, Member (Judicial) and C L Mahar, Member (Technical) observed that “Even at the subsequent stages of adjudication or before the Commissioner (Appeals), no evidence was brought on record by the Revenue that appellant have taken any Cenvat credit on the input, input service or capital goods. In this position, it is clear that the appellant has not availed Cenvat credit on the capital goods therefore, there is no violation of condition (iii) of the Notification No. 6/2005-ST.”

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