2015 (12) TMI 1576 - AT - Service Tax

Demand of interest - appellant utilized accumulated Cenvat credit while discharging Service Tax liability from Cenvat credit on GTA Services under reverse charge mechanism - whether interest is required to be paid by the appellant for wrongly availing and utilizing Cenvat credit - Held that - demand of Service Tax for the period 1-1-2015 to 31-3-2007 was paid in cash on 13-9-2007 & 27-9-2007 belatedly. Therefore, interest liability for wrongly utilization of Cenvat credit and late payment of duty in cash is attracted and has been correctly upheld by the first appellate authority. - Decided against the appellant

Summary

Issues:
1. Whether interest is required to be paid for wrongly availing and utilizing Cenvat credit.

Analysis:
The appellant filed an appeal against the Order-in-Appeal passed by the Commissioner (Appeals-I), Kolkata. The appellant argued that they utilized accumulated Cenvat credit to discharge Service Tax liability on GTA Services under reverse charge mechanism. They sought clarification from the department regarding the correctness of their procedure. The appellant paid Service Tax on GTA Services after availing a 75% exemption from the gross value charged by GTA. The appellant contended that no interest should be levied as they had reversed the entire Cenvat credit taken. They cited case laws to support their argument, asserting that the case law of the Apex Court in UOI v. Ind. Swift Laboratories was not applicable to their case. The appellant's representative emphasized that they had utilized Cenvat credit for payment of Service Tax, which was not admissible.

The Revenue argued that interest was due on an amount where Cenvat credit was utilized to discharge duty liability under reverse charge, which should have been paid in cash. After hearing both sides and examining the case records, the Tribunal identified the central issue as whether interest was payable by the appellant for incorrectly availing and using Cenvat credit. The Tribunal noted that the Service Tax demand for a specific period was paid belatedly in cash, and interest liability for the improper utilization of Cenvat credit and late cash payment of duty was justified. The Tribunal rejected the appellant's reliance on certain case laws, stating that those cases were not applicable to the current factual scenario where the appellant had used Cenvat credit for Service Tax payment, which was impermissible.

Ultimately, the Tribunal dismissed the appeal, affirming that interest was indeed required to be paid by the appellant for the erroneous availing and utilization of Cenvat credit. The decision was pronounced in open court, upholding the interest liability on the appellant for their actions.