2016 (3) TMI 712 - AT - Service Tax

Liability of Interest - Cenvat Credit wrongly taken for the period April 2009 to November 2009 - Held that - as the Cenvat Credit has wrongly taken/claimed by the appellant for the said period, trhe interest become payable under provisions of Rule 15(1) of Cenvat Credit Rules 2004 read with provisions of Section 75 of Finance Act, 1994 to be paid by the appellant. Imposition of penalty - Rule 15(1) of Cenvat Credit Rules - Cenvat Credit wrongly taken for the period April 2009 to November 2009 - Appellant said that the said services were received from abroad in their Mumbai office and statements using such services come to their centralized office in Bangalore - Held that - there was no intention of the appellant to take the Cenvat Credit when it was not due. In fact it had become due to them, when they had paid the service tax in the month of November 2009 and the reason has explained by the appellant for the same mistake. Sometimes such unintentional mis-happenings/mistakes do take place for which the appellant is not to be punished by imposing the penalties. Therefore, by considering the decision of the Hon ble Supreme Court in the case of Hindustan Steel Ltd. Vs. State of Orissa 1969 (8) TMI 31 - SUPREME Court , the penalty under Rule 15 ibid is not imposable. Eligibility of Cenvat Credit - Taken twice on same set of documents - Appellant pleaded that that they have seven documents against eight documents to prove correctness of the credit and the 8th document is not available but for this they have a board letter confirming the eligibility of taking Cenvat Credit - Held that - as regard to appellant plead, matter remanded to the original adjudicating authority with the direction that the appellant is given full opportunity of personal hearing and that of submission of necessary documents before taking decision in the case afresh. - Decided partly in favour of appellant

Summary

Issues:
1. Irregular availment of cenvat credit by a public sector bank.
2. Alleged wrongful cenvat credit on various counts.
3. Imposition of penalty under Rule 15(1) of Cenvat Credit Rules.

Analysis:
Issue 1: The appellant, a public sector bank, was charged with irregular availment of cenvat credit. The appellant explained that the credit in question was mistakenly taken in April 2009 instead of November 2009 for input services received from abroad. The appellant pleaded for leniency under Section 80 of the Finance Act, 1994, citing genuine mistakes made by their employees.

Issue 2: The appellant accepted the mistake of wrongly availing cenvat credit on electricity bills, VAT payments, and other charges, but argued that these were genuine errors made by their staff in the Cenvat department. The appellant defended the cenvat credit taken more than once, stating they had sufficient documents to prove its correctness and eligibility. The Revenue argued against leniency, highlighting the failure to pay interest on the wrongly availed credit.

Issue 3: The Revenue imposed a penalty under Rule 15(1) of the Cenvat Credit Rules for the alleged wrongful cenvat credit. The appellant contended that there was no intention to wrongly avail the credit and promptly reversed it upon detection. The appellant cited the Hon'ble Supreme Court's decision in Hindustan Steel Ltd. Vs. State of Orissa to support their argument against the penalty.

Judgment: After reviewing the submissions and facts, it was established that the appellant had indeed taken wrong cenvat credit between April 2009 to November 2009. The liability for interest on the wrongly claimed cenvat credit was confirmed under Rule 15(1) of Cenvat Credit Rules 2004 and Section 75 of the Finance Act, 1994. However, considering the unintentional nature of the lapse and the appellant's explanation, the penalty of Rs. 14,67,499 imposed under Rule 15(1) was set aside based on the principles outlined in the Hindustan Steel Ltd. case. The matter of the cenvat credit amount of Rs. 6,85,310 was remanded to the original adjudicating authority for further review within a specified timeframe.