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July 2016

2016 (42) STR 450 (Tri-Mum.) Commr. Of Ex., Goa vs. Kamat Constructions & Resorts Pvt. Ltd.

By Puloma Dalal
Jayesh Gogri
Mandar Telang
Chartered Accountants
Reading Time 2 mins
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III. Tribunal

CENVAT credit on capital goods is allowed when the assessee was registered as a service receiver (person liable to take registration under reverse charge) only which was subsequently amended as a service provider. Further full CENVAT credit of capital goods is allowed in the second or the third year when no CENVAT is taken in the first year.

Facts
The Appellants had bought duty paid capital goods and subsequently availed CENVAT credit for the same. However, it was registered as service receiver when the capital goods were bought. Therefore, the adjudicating authority disallowed the CENVAT with respect to the same. Subsequently the Appellants amended its registration as Service provider on a later date. With respect to some capital goods procured by the assessee, the assessee had not taken any CENVAT credit in its first year and had taken full CENVAT credit in the second/subsequent years. The adjudicating authorities levied interest and penalties stating that CENVAT credit was taken wrongly.

Held
It was observed that in various judgments, Tribunals have allowed CENVAT credit for those assessees who were not registered with the service tax department at all. However, in the present case, the Appellants were at least registered as a service recipient. Therefore, there is no reason why credit in the present case be not allowed. Further, it was observed that with respect to CENVAT credit of capital goods, provision of Rule 4(2) of CCR allows an assessee to avail 50% of CENVAT in the first year and balance CENVAT in the subsequent years. Hence, if no credit has been taken in the first year at all, the assessee can avail 100% CENVAT in subsequent years. Therefore appeal was allowed.

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