2015 (10) TMI 1318 - AT - Central Excise

Imposition of penalty - Rule 15(1) of Cenvat Credit 2004 - cenvat credit on GTA service - Held that - The contention of the appellant is that they have taken credit on the basis of the Larger Bench decision. The Hon ble Karnataka High Court 2011 (3) TMI 248 - KARNATAKA HIGH COURT has restricted the credit upto March 2008 and the period after the decision of the Hon ble High Court the appellant reversed the credit. I find that in any event, there is contravention of Rule as well as the appellant availed credit after the decision of the Hon ble Karnataka High Court in the case of ABB Ltd. Therefore, there is some force in the submission of the Learned Authorised Representative for the Revenue. However, considering overall facts and circumstances of the case, in my view, the quantum of penalty is excessive. - Penalty is reduced - Decided partly in favour of assessee.

Summary

Issues:
- Imposition of penalty under Rule 15(1) of Cenvat Credit 2004
- Eligibility of Cenvat Credit on GTA Service up to customers' premises
- Disclosure of cenvat credit in the return
- Reduction of penalty amount

Imposition of Penalty:
The applicant filed for early hearing of the appeal challenging the penalty of Rs. 5,00,000 imposed under Rule 15(1) of Cenvat Credit 2004. The appellant argued that they availed the credit based on a decision of the Larger Bench of the Tribunal and reversed it after the High Court's decision. The Revenue, however, contended that the appellant did not disclose the credit in their return, and the wrong availment came to light during record scrutiny. The judge noted that the appellant did not contest the duty demand but disputed the penalty. While acknowledging the contravention of rules, the judge found the penalty excessive and reduced it to Rs. 75,000.

Eligibility of Cenvat Credit on GTA Service:
The dispute revolved around the eligibility of Cenvat Credit on GTA Service up to customers' premises for the period April 2011 - November 2011. The appellant cited a Tribunal case and a High Court decision to support their claim that the credit was admissible up to a certain period. They argued that they reversed the credit post the High Court's decision. The judge recognized the appellant's reliance on legal precedents but noted the contravention post the High Court's decision. Despite some merit in the Revenue's arguments, the judge considered the circumstances and reduced the penalty amount.

Disclosure of Cenvat Credit in the Return:
The Revenue highlighted that the appellant had not disclosed the availment of cenvat credit in their return, and the wrongful availment was discovered during record scrutiny. This non-disclosure was a point of contention in the case, emphasizing the importance of accurate reporting and transparency in tax matters.

Reduction of Penalty Amount:
Ultimately, the judge modified the impugned order by reducing the penalty from Rs. 5,00,000 to Rs. 75,000, considering the overall facts and circumstances of the case. The appeal was disposed of with the reduced penalty amount, bringing a resolution to the issue of penalty imposition in the case.