2017 (5) TMI 1625 - AT - Service Tax

CENVAT Credit - tippers which were used by them for rendering the services of site formation, clearance, excavation and demolition services - Held that - An identical issue came before Tribunal Bench in the case of Ganta Ramanaiah Naidu Vs CCE, Guntur 2009 (9) TMI 261 - CESTAT, BANGALORE wherein it was held that the cenvat credit availed on central excise duty on the tippers is ineligible as these vehicles are not capital goods, during the period in question, came to a conclusion on the basis of definition of Capital Goods and upheld the demand and interest - CENVAT credit not allowed. Penalties - Held that - It can be a view of the appellant that for rendering the services of site formation, clearance, excavation and earth filling and demarcation services on which service tax liability applicable and hence benefit of duty paid on tippers which are used for removal of from sites, could be treated as capital goods - as issue is of interpretation, the penalty not warranted and is set aside. Confiscation of vehicles - Held that - Having held that the appellant is liable to reverse the cenvat credit of such tippers which is to be held that they have reversed irregularly availed cenvat credit, provisions of rule 15 of Central Excise Rules would apply which mandate for their confiscation of the said tippers - confiscation upheld - quantum of redemption fine reduced. Appeal allowed in part.

Summary

Issues:
Confiscation of goods (Tipper), imposition of penalties under rule 15 of Cenvat Credit Rules, 2011, eligibility of availing Cenvat credit on tippers, misdeclaration of services, redemption fine, applicability of penalties, confiscation of vehicles, reduction of redemption fine.

Confiscation of Goods (Tipper) and Penalties:
The appeal questioned the correctness of confiscating the goods (Tipper), extending redemption benefits, and imposing penalties under rule 15 of Cenvat Credit Rules, 2011. The appellant availed Cenvat credit on tippers as capital goods, but investigation revealed ineligibility. The adjudicating authority confirmed demands, penalties, and confiscation, allowing redemption on payment. The first appellate authority upheld the duty liability but reduced fines and penalties. The Tribunal cited a similar case and ruled that Cenvat credit on tippers was ineligible, upholding demands and interest. The penalties were set aside based on a bonafide view held during the relevant period.

Misdeclaration of Services and Redemption Fine:
The appellant argued against the redemption fine, claiming the tippers were duty paid and used for dutiable services, possibly misdeclared as cargo handling services. The Tribunal found the appellant not liable for Cenvat credit on tippers, following the Division Bench's decision. Penalties were set aside based on the bonafide view held during the relevant period. The confiscation of tippers was upheld due to irregularly availed Cenvat credit, with a reduction in the redemption fine from ?3.00 lakhs to ?1.00 lakh.

Conclusion:
The Tribunal concluded that the appellant was not entitled to Cenvat credit on tippers, setting aside the penalties based on bonafide views during the relevant period. Confiscation of tippers was upheld due to irregularly availed Cenvat credit, with a reduction in the redemption fine. The appeal was disposed of accordingly.