Commissioner of Central Excise, Ludhiana Vs. Cool Collections [2014 (8) TMI 472 – CESTA T NEW DELHI]

Cool Collections (“the Assessee”) are registered under Service tax as Consignment agent and Sales agent. The Assessee deposited Service tax of Rs. 19,155/- on the value of taxable services amounting to Rs. 1,87,409/- during the period 2005-06 (“the period”). Further, the Assessee    had availed     Cenvat    credit   of Service tax paid on telephone service (“input service”) during the period. Later on, the Assessee reversed the Cenvat credit so availed on the input service and filed  refund claim of the Service tax deposited on the ground that since during the period, the value of their taxable services remained below the monetary limit of Rs. 4 lakhs and they were covered under erstwhile Small Service Provider Exemption Notification No. 6/2005-ST dated March 1, 2005 (“SSI Exemption Notification”), this is now replaced by the Notification No. 33/2012-ST dated. June, 20, 2012, exempts taxable services of aggregate value not exceeding Rs. 10 lakhs in any financial year.

However, the Adjudicating Authority denied the refund claim on the ground that as per condition no. (ii) of the SSI Exemption Notification, the provider of taxable service should not avail the Cenvat credit of Service tax paid on any input services. As it is apparent from the records that the Assessee had availed the credit on input service, they were not entitled for the benefit of the said Notification.

On appeal, the Commissioner (Appeals) relying upon the decision of the Apex Court in the case of Shri Hari Chemical Exports Ltd. Vs. UOI [2006 (193) E.L.T. 257 (S.C.)] (“the Hari Chemical case”) allowed the refund claim. Being aggrieved by the said order, the Revenue preferred an appeal before the Hon’ble CESTAT, Delhi.

The Hon’ble CESTAT, Delhi also relied upon the Hari Chemical case wherein it was held that “only because in his books of accounts entries are made for taking of the credit in terms of one provision of the Rules, the same if ultimately found to be inapplicable and return of the credit is taken effect, we are of the opinion that there cannot be any legal bar in claiming the exemption under another rule”. Thus, the Hon’ble Tribunal observed that though the Assessee has taken credit on input service during the period but have not utilized the same and have reversed later on, benefit of the SSI Exemption Notification cannot be denied and decided against Revenue.

(Bimal Jain, FCA, FCS, LLB, B.Com (Hons), Mobile: +91 9810604563, Email:

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October 2020