2017 (3) TMI 505 - AT - Central Excise

CENVAT credit - repair and maintenance undertaken in the residential colony of the employees - Held that - no evidence has been produced that cost of maintenance of townships is included in the cost of production for arriving at the assessable value - credit rightly denied. Interest - Held that - the same is compensatory in nature - reliance placed in the case of Pratibha Processors Vs. UOI 1996 (10) TMI 88 - SUPREME COURT OF INDIA , where it was held that The levy of interest is geared to actual amount of tax withheld and the extent of the delay in paying the tax on the due date - demand of interest upheld. Penalty - Held that - appellants are a public sector undertaking and there are no allegations in the show cause notice that there is any fraud or collusion involved in this case - penalty withheld. Appeal disposed off - decided partly in favor of appellant.

Summary

Issues:
- Appeal against order of Commissioner of Central Excise
- Availing Cenvat Credit on Service Tax paid for input services
- Waiver of interest and penalty
- Eligibility of Cenvat Credit for repair and maintenance services
- Applicability of case laws in support of Cenvat Credit
- Compensatory nature of interest
- Penalty imposition on a public sector undertaking

Analysis:

The appellants challenged the order passed by the Commissioner of Central Excise regarding availing Cenvat Credit on Service Tax paid for input services. The case involved a public sector undertaking seeking waiver of interest and penalty. The appellants argued that there was no willful evasion or intent to evade tax as they believed in good faith that they were eligible for the credit. They highlighted being a Government undertaking, indicating no intention to evade tax.

During the proceedings, the appellants cited various case laws to support their claim for admissibility of Cenvat Credit and waiver of penalty. The Advocate relied on specific cases to argue for the penalty waiver. On the other hand, the Respondent reiterated the findings of the Order-in-Appeal, emphasizing the prayer for penalty and interest waiver only.

The Tribunal analyzed the eligibility of Cenvat Credit for repair and maintenance services based on precedents. They discussed conflicting judgments from different High Courts and previous Tribunal decisions. The Tribunal distinguished relevant case laws and concluded that the judgment of the Bombay High Court was applicable in the present case, upholding the demand made by the Commissioner.

Regarding interest, the Tribunal referred to the compensatory nature of interest, citing a judgment from the Hon'ble Apex Court to explain the distinction between tax, interest, and penalty. The Tribunal upheld the order of the Commissioner concerning the interest amount.

In terms of penalty, the Tribunal considered the nature of the appellants as a public sector undertaking and found no evidence of fraud or collusion. Relying on a previous Tribunal decision affirmed by a High Court, the Tribunal set aside the penalty imposed on the appellants.

Ultimately, the Tribunal upheld the order of the Commissioner concerning the demand and interest, while setting aside the penalty. The appeal was disposed of accordingly, with the judgment pronounced in court on a specific date.