2017 (9) TMI 508 - AT - Service Tax

CENVAT credit - Volvo Tippers and Scania Tippers - Held that - availment of CENVAT credit of the Central Excise duty paid on the tippers is now settled by the decision of Division Bench of the Tribunal in the case of Ganta Ramanaiah Naidu 2009 (9) TMI 261 - CESTAT, BANGALORE in the said decision the Bench came to a conclusion the CENVAT credit availed on Central Excise duty paid on tippers is not available. Interest - Held that - Since the appellant is not eligible to avail CENVAT credit and has reversed the same, and is liable to pay the interest in accordance with the law, the appeal to that extent is rejected. Penalty - Held that - the penalties which were imposed were set aside holding that these could be a bona fide belief that CENVAT credit Central Excise duty paid is available as tippers were used for rendering output services on which service tax liability is discharged - penalty set aside. Appeal dismissed - decided partly in favor of appellant.

Summary

Issues:
1. Imposition of penalty and demand of interest on CENVAT credit availed by the appellant.
2. Validity of penalty imposed by the adjudicating authority.

Analysis:
1. The appeal was filed against the Order-in-Original No. 30/2009 ST dated 12.08.2009, which pertained to the appellant availing CENVAT credit of Central Excise duty on "Volvo Tippers and Scania Tippers" for rendering taxable services between October 2007 to March 2008. The appellant contested a show cause notice demanding the reversal of CENVAT credit, interest payment, and imposition of penalty. During the proceedings, the appellant reversed the entire CENVAT credit. The Adjudicating Authority demanded interest under the Finance Act, 1994, and imposed a penalty under the CENVAT Credit Rules, 2004.

2. The appellate tribunal considered the submissions made by the Departmental Representative and reviewed the records. The tribunal noted a previous decision by a Division Bench in the case of Ganta Ramanaiah Naidu, where it was concluded that CENVAT credit availed on Central Excise duty paid on tippers was not permissible. Since the appellant had reversed the CENVAT credit and was not eligible to avail it, the tribunal rejected the appeal concerning the interest payment.

3. Regarding the penalty imposed by the adjudicating authority, the tribunal referred to the Division Bench decision in the case of Ganta Ramanaian Naidu, where penalties were set aside due to a bona fide belief that the CENVAT credit was available for tippers used in rendering taxable services. Considering this precedent and the Division Bench decision, the tribunal set aside the penalty imposed by the adjudicating authority.

4. In conclusion, the tribunal disposed of the appeal by rejecting the appeal concerning interest payment and setting aside the penalty imposed by the adjudicating authority. The decision was made based on the appellant's ineligibility to avail CENVAT credit and the precedent set by previous tribunal judgments.