Wellknown Polyester Ltd Vs C.C.E. & S.T.-Daman (CESTAT Ahmedabad)
Summary: The Customs, Excise & Service Tax Appellate Tribunal, Ahmedabad considered whether Service Tax credit could be availed where Service Tax was paid through a supplementary challan in circumstances involving suppression, mis-declaration, etc., but the tax was paid by the service recipient under the reverse charge mechanism. The Tribunal found the issue squarely covered by the decision in Nissan Motor India Pvt. Ltd. and held that the restriction contained in Rule 9(1)(bb) of the CENVAT Credit Rules, 2004 did not apply where the Service Tax had been paid under reverse charge by the recipient. The Tribunal reproduced the relevant reasoning that Rule 9(1)(bb) concerns a supplementary invoice, bill or challan issued by a provider of output service where additional tax becomes recoverable in specified circumstances, whereas payment made by a service recipient under reverse charge falls within Rule 9(1)(e).
The Tribunal also considered the decision in Essar Oil Ltd. Vs CCE, Rajkot, which explained the circumstances in which credit could be availed on documents evidencing payment of additional duty and held that the specified documents under the CENVAT Credit Rules were illustrative and could not bar credit otherwise admissible under the substantive credit provision. The Tribunal noted the decisions of the Karnataka High Court in Karnataka Soaps & Detergent Ltd. v. CCE, Mysore, and other authorities concerning credit based on duty-paying challans and reassessment. Applying the settled position to the present case, the Tribunal concluded that the payment of Service Tax under reverse charge was covered by Rule 9(1)(e), and not Rule 9(1)(bb), of the CENVAT Credit Rules, 2004.
