VIJAYANAND ROADLINES LTD. Vs. COMMISSIONER OF CENTRAL

JUDGEMENT

(1.) THIS appeal has been filed against the Order -in -Appeal No. 177/2005 dated 09.09.2005 passed by the Commissioner of Central Excise (Appeals) Mangalore. The Revenue proceeded against the appellants on the ground that they had exceeded the limit of utilization of credit under Rule 3(5) of Service Tax Credit Rules, 2002. The adjudicating authority confirmed the demand of Rs. 3,01,932/ - along with interest and imposed penalty of Rs. 100/ - per day under Section 76 of the Chapter V of the Finance Act, 1994. On appeal, they were not successful. The Commissioner (Appeals) held that the availment of credit in terms of Rule 3(5) to the extent of 35% of amount payable has to be made with reference to periodical liability. Consequently an effective restriction was imposed, as a result of which accumulated credit cannot be used beyond 35% of the amount payable for each month/quarter when such payment is due. He has observed that Rule 4(1) of the Credit Rule does not come to the rescue of appellant overriding the restriction accepted by them in terms of Rule 3(5). Hence he upheld the order of the lower authority. 3. Shri M.S. Nagaraja, learned Advocate appeared for the appellants and Shri K. Sambi Reddy, learned JDR appeared for the Revenue. 4. The learned Advocate urged the following points: