PUSHPENDRA SINGH BHATI,J. - (1.) Learned counsel for both the parties submits that order dated 13.09.2019 passed therein was erroneously passed instead of the order being passed in D.B.Central Excise Appeal No.126/2017.
(2.) Accordingly, the order passed therein stands re-call and the present appeal stands withdrawn on account of the Circular No. F.No.390/Misc./116/2017-JC dated 22.08.2019 issued by the Ministry of Finance, Department of Revenue, Central Board of Indirect Taxes and Customs, the tax effect involved in the present being less than Rs.1 crore, learned counsel appearing for the appellant seeks permission to withdraw the appeal.
(3.) The appeal is dismissed as withdrawn. D.B.Central Excise Appeal No.126/2017:- 1. The question of law framed in this case in order dated 06.08.2019 is as follows:- "Whether the learned CESTAT, New Delhi has erred in allowing the assessee to avail the Cenvat credit of service tax on that portion of value of services which was not paid by the assessee at the time of taking credit and was retained as performance guarantee in contravention of the provisions of Rule 4(7) of the Cenvat Credit Rules, 2004?" 2. The facts are that the assessee was engaged in manufacturing of lead and zinc concentrate; it availed Cenvat credit excise duty paid on the inputs and capital goods and credit of the service tax paid on input services. Alleging that the full payment of value of the input services was not in fact made to the Service Providers during 2006-07 to 2009-10 a show cause notice was issued. The Adjudicating Authority dropped the demand in the order in original on 01.06.2017. The Excise Department appealed to the Customs Excise and Service Tax Appellate Tribunal (CESTAT). Relying upon a previous decision in Commissioner of Central Excise, Jaipur-II Vs. Hindustan Zinc Ltd., 2014 (34) STR 440 (Tri. Del), the CESTAT allowed the appeal. While doing so, it was mainly influenced by a circular dated 30.04.2010. 3. This Court has considered the submissions of the parties. 4. The main argument of the Revenue is that withholding of amounts towards performance guarantee is not covered by the circular but the other forms of payment withheld from service provider might be. 5. The relevant extract of the circular dated 30.04.2010 to the extent it has been relied upon is as follows:- "3. As per sub-rule (7) of Rule 4 of the CENVAT credit Rules, 2004, "Credit in respect of input service shall be allowed, on or after the day on which payment is made of the value of input service and the service tax paid or payable as is indicated in invoice, bill or as the case may be, challan referred to in Rule 9." A doubt raised as to whether the receiver of input service can take credit only after the full value that is indicated in the invoice, bill or challan raised by the service provider, and also the service tax payable thereon, has been paid. It has been represented that in many cases, after the invoice is issued by the service provider, the service receiver does not make the full payment of the invoiced amount on account of discount agreed upon after issuance of invoice; or deducts certain amount due to unsatisfactory service; or withholds some amount as security to be held during contract period. Due to these reasons the value paid may not tally with the amount indicated in the invoice, bill or challan. In such cases the department has raised objections to the taking of credit as it does not meet the requirement of the said sub-rule (7). ;