2017 (8) TMI 61 - AT - Central Excise

Penalty u/r 15(i) of CCR, 2004 - CENVAT credit - GTA services - Held that - the appellant had availed the CENVAT credit of the service tax paid on GTA services which were utilized by them for outward transportation of finished goods manufactured by them. The period involved in this case is July 2008 to October 2011 and during the relevant period, appellant s could claim that they have entertained a bonafide belief that they can avail the CENVAT credit of the service tax paid on outward transportation can be accepted, as the Larger Bench of the Tribunal in the case of ABB Ltd., 2009 (5) TMI 48 - CESTAT, BANGALORE has held so being an activity related to the business. Equivalent amount of penalty imposed by the adjudicating authority and upheld by the first appellate authority seems unwarranted, as it is generally imposed only in the case of suppression, fraud, mis-statement of the facts with intent to evade duty. These three ingrediants are not alleged in the show cause notice nor there are any findings of the same in the orders of the adjudicating authority as well as the first appellate authority - the ends of justice may be met in this case if the penalty imposed on the appellant is reduced from ₹ 7,94,122/- ₹ 50,000/- under Rule 15(i) of CENVAT Credit Rules, 2004. Appeal allowed - decided partly in favor of appellant.

Summary

Issues: Contesting penalty under Rule 15(i) of CENVAT Credit Rules, 2004

In this case, the appellant contested the equivalent penalty imposed by the adjudicating authority under Rule 15(i) of the CENVAT Credit Rules, 2004. The appellant did not dispute the demand for duty and interest, which they had already paid before the show cause notice was issued. The appellant argued that there was no willful intent to evade duty and that the penalty was unwarranted as there was no allegation of suppression, fraud, or misstatement of facts to evade duty. The appellant cited a previous Tribunal case to support their argument. The Tribunal noted that the appellant had availed CENVAT credit on service tax paid for outward transportation of goods, believing it to be legitimate. However, the Tribunal found that the appellant's belief was not acceptable for the later period as the law had changed. The Tribunal concluded that the penalty imposed was excessive and reduced it significantly, considering the absence of evidence of intent to evade duty. The appeal was disposed of with modifications to reduce the penalty imposed under Rule 15(i) of CENVAT Credit Rules, 2004.