Case Law Details
Magnam Netlink Private Ltd Vs C.C.E. & S.T (CESTAT Ahmedabad)
The recent decision in Magnam Netlink Pvt. Ltd. Vs C.C.E. & S.T. by the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) in Ahmedabad brings forth crucial insights into the administration of the Cenvat Credit Rules, 2004. The central question of the case pertains to the appellant’s liability to pay an amount equivalent to 6%/7% of the value of exempted services like “Trading”, as stipulated under Rule 6 (3) of the Cenvat Credit Rules, 2004.
In this case, the appellant had availed the cenvat credit on common input services, a portion of which was attributed to exempted services like trading. The dispute emerged when the department argued that the appellant didn’t follow proper procedures for reversing cenvat credit under Rule 6 (3). The tribunal, however, held that the demand under Rule 6 (3) was unsustainable as the appellant had reversed the credit for common input services (attributed to exempted services), following its identification in the EA 2000 audit. The tribunal drew support from a similar ruling in the M/s. Aims Industries Ltd case.
Interestingly, the tribunal decided to remand the matter back to the adjudicating authority, requiring reconsideration of the quantification and correctness of cenvat credit reversal along with the payment of interest.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
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