2015 (1) TMI 284 - AT - Service Tax

CENVAT credit - delay in availing credit on few invoices - cenvatable documents for the earlier period and which was not available in appellant s CENVAT register during the visit of the Audit officers - Misdeclaration of information - Held that - Appellant cannot take cenvat credit in the CENVAT account on a date earlier than the visit of the audit officers when such credit was not earlier reflected in the CENVAT account. If some credit was admissible on the basis of cenvatable documents existing with the appellant, but credit was not taken, then the same could have only been taken after the date of visit of the Audit officers. It has been correctly held by the first appellate authority that if certain invoices were left out for which credit was not taken earlier then the same can be taken only as per the prescribed procedures and not on any date as per appellant s choice by modifying the records at will. Appeal filed by the appellant with respect to demand of ₹ 4,36,780/- along with interest is therefore, rejected. So far as remaining amount of demand of ₹ 5,80,856/- is concerned, it is observed that appellant gave wrong figures of ₹ 29,86,623/- as cenvat utilisation in the month of April 2004 instead of actual utilisation of ₹ 24,05,767/-. It is observed from the case records that this aspect was agitated before the lower authorities but the same was not properly appreciated by the Adjudicating authority. There is no discussion by the adjudicating authority as to why the revised claim of utilisation of ₹ 24,05,767/- CENVAT credit utilisation is not correct. This aspect of the demand is required to be remanded back to the Adjudicating authority for reconciliation. So far as imposition of penalties upon the appellant are concerned, it is observed that appellant was of the bonafide belief that CENVAT credit could be taken on an earlier date also where cenvatable documents were available with them. In the case of clandestine removal cases are admissible CENVAT credit is abated from the total demand even at the appellate stage. Further demand of ₹ 5,80,856/- is with respect to reconciliation of figures regarding taking of cenvatable credit. On the basis of above factual matrix, penalties under Section 76 and 78 of the Finance Act, 1994 are required to be set-aside under Section 80 of the Finance Act, 1994, even if extended period is invokable - Decided partly in favour of assesse.

Summary

Issues:
1. Adjustment of CENVAT credit based on earlier documents
2. Discrepancy in CENVAT utilization figures
3. Imposition of penalties under Sections 76 and 78 of the Finance Act, 1994

Analysis:

Adjustment of CENVAT credit based on earlier documents:
The appellant argued that a portion of the confirmed demand was available as CENVAT credit based on existing documents during the relevant period. They claimed that the credit was not taken at the time of audit but was later adjusted in a revised return. The lower authorities demanded an amount due to calculation errors, which the appellant contended was not demandable. The Tribunal observed that CENVAT credit cannot be taken before it is reflected in the CENVAT account during the audit. The demand of the adjusted amount along with interest was upheld as the adjustment was made before the audit visit, not in accordance with prescribed procedures.

Discrepancy in CENVAT utilization figures:
The appellant provided incorrect figures for CENVAT utilization, leading to a discrepancy in the demanded amount. The Tribunal noted that this issue was not properly addressed by the lower authorities, and the case required remand for reconciliation after granting a personal hearing to the appellant. The discrepancy in figures needed clarification and proper assessment by the Adjudicating authority.

Imposition of penalties under Sections 76 and 78 of the Finance Act, 1994:
Regarding penalties imposed on the appellant, it was argued that the appellant believed in good faith that CENVAT credit could be taken based on available documents. The Tribunal considered the circumstances and the nature of the demand, indicating that penalties under Sections 76 and 78 of the Finance Act, 1994 should be set aside under Section 80 of the same Act. The penalties were deemed unwarranted considering the factual matrix of the case.

In conclusion, the appeal was allowed in part, upholding the demand related to adjusted CENVAT credit but remanding the discrepancy in utilization figures for further review. The penalties imposed on the appellant were set aside based on the belief held by the appellant and the nature of the demand.