2024-VIL-936-CESTAT-BLR-ST
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SERVICE TAX CESTAT Cases

Service Tax - Cenvat credit - Adjustment of excess duty/tax payment – appellant availed inadmissible cenvat credit during September 2004 to November 2006 on inputs removed from the registered premises "as such" for trading activity - The appellant had also erroneously paid service tax on export of services, which was refundable - The Department confirmed the demand of the inadmissible cenvat credit along with interest and penalty - Whether the adjustment of the outstanding inadmissible credit against the excess payment of service tax under Rule 6(3) of the Service Tax Rules, 2004 is permissible - recovery invoking the larger period of limitation - HELD - The adjustment of the outstanding inadmissible cenvat credit against the excess payment of service tax is not permissible under Rule 6(3) of the Service Tax Rules, 2004, as the said Rule allows only the adjustment of excess service tax paid against the service tax liability for the subsequent period. However, the recovery of the inadmissible cenvat credit is not permissible, as there was no recovery mechanism available under Rule 3(5) of the Cenvat Credit Rules, 2004 during the relevant period, and the recovery provision was introduced only through an Explanation inserted vide Notification No. 3/2013-CE(NT) dated 01.03.2013, which is prospective in nature - Further, the Department was aware of the adjustment since February 2007, and the show-cause notice was issued after two years, thus the invocation of extended period of limitation is not sustainable - The impugned order is set aside and appeal is allowed
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