2019 (8) TMI 1510 - AT - Central Excise

CENVAT Credit - input services availed for renting of immovable property services - retail outlet, place of removal or not - imposition of penalty - HELD THAT - An identical issue has been decided by the Tribunal in the case of CANTABIL RETAIL INDIA LTD, RAJESH ROHILLA, ANIL BANSAL, DIRECTOR VERSUS CCE, DELHI-I AND (VICE-VERSA) 2017 (9) TMI 205 - CESTAT NEW DELHI wherein it has been held that the assessee is legally eligible for credit of service tax paid on rent amount paid for company run retail outlets used for storage and sale of duty paid goods for the reason that the said retail outlets will be considered as place of removal since the company remains the owner of goods till the excisable goods are sold from the said premises after payment of duty from the factory - the appellant is entitled to credit of said services. Imposition of interest and penalty - HELD THAT - The Tribunal confirmed the imposition of interest and penalty on the disallowed amount of CENVAT credit, which is not the case herein inasmuch as the appellant has already paid the duty amount with interest well before issue of Show Cause Notice and is now praying for waiver of penalty in absence of allegation of fraud or suppression - the appellant in this case is entitled to waiver of penalty in terms of Section 11A(2) of the Central Excise Act. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Disallowance of CENVAT credit on input services; Imposition of penalty for wrong availment of credit and short payment of duty.

Analysis:
The appeal was filed against the disallowance of CENVAT credit on input services by M/s Terai Foods Pvt Ltd. The appellant, a manufacturer of bakery items, transferred goods to a retail outlet and availed credit on rental charges for the outlet. The central excise department denied the credit, imposed interest, and penalties. The appellant contended that they were eligible for the credit as the retail outlet was the "place of removal" under the Central Excise Act. The department disagreed, leading to a dispute.

The Tribunal referred to a similar case where credit for service tax on rent for retail outlets was allowed, considering them as "place of removal." Following this precedent, the Tribunal held that the appellant was entitled to the credit of input services, overturning the department's decision.

Regarding the penalty imposed for wrong credit availment and short payment of duty, the appellant had paid the amounts with interest upon departmental notification without disputing. The appellant sought a waiver of the penalty, citing a case supporting their plea. The Tribunal noted that the appellant had paid the duty promptly and had no intent to evade payment. Relying on the Central Excise Act, the Tribunal granted a waiver of penalty, setting aside the duty demand, interest, and penalties imposed.

In conclusion, the Tribunal allowed the appeal, setting aside the duty demand, interest, and penalties, as the credit was deemed legally eligible. The penalty was waived based on the absence of fraud or suppression, in line with the provisions of the Central Excise Act.