Customs, Excise and Service Tax Appellate Tribunal

Ineos Styrolution India Ltd vs. C.C.E. & S.T. Vadodara-I

MANU/CS/0055/2022

07.03.2022

Service Tax

Demand of reversal of cenvat credit cannot be upheld, as Rule 9(1)(bb) of the Cenvat Credit Rules is not applicable

Present appeal has been filed by Ineos Styrolution (India) Ltd. against demand of reversal of cenvat credit, interest and imposition of penalty under Section 78 of Finance Act read with Rule 15(2) of Cenvat Credit Rules, 2004. Learned Counsel for the Appellant pointed out that, Rule 9(1)(bb) is not applicable, when credit of service tax is availed on the basis of supplementary invoices. He argued that the said rule does not apply to case of service tax paid under reverse charge mechanism as in the present case.

The Appellant has discharged his service tax liability under Reverse Charge Mechanism availing the benefit of VCES Scheme. In the instant case, it is an undisputed fact that service tax has been paid by the Appellant under Reverse Charge Mechanism in the capacity of 'recipient of service' and not as 'provider of service'. In these circumstances, the case of the Appellant would be covered under Rule 9(1)(e) of the Cenvat Credit Rules, 2004.

The entire case of the Revenue is based on invocation of Rule 9(1)(bb) of the Cenvat Credit Rules and since the said Rule is not applicable in respect of the service tax paid by the recipient of service under Reverse Charge Mechanism, the demand of reversal of cenvat credit cannot be upheld. There is no merit in the impugned order and the same is set aside. Appeal is allowed.

Tags : Demand Penalty Imposition

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