2017 (10) TMI 194 - AT - Central Excise

CENVAT credit - input services - vehicles on which insurance is paid - Held that - availment of cenvat credit of the service tax paid on insurance post 01.04.2011 is not eligible to be availed as Cenvat credit, is the law which, is incorporated in the definition of input services. Since the definition of input services has undergone a change wherein eligibility to avail of Cenvat credit of the service tax paid on insurance premium is incorporated, I find that availment of such credit is wrong and correctly denied by the lower authorities - appellant has made out a case for setting aside the penalties imposed on them as there can be bonafide belief to entertain that they are eligible for availment of cenvat credit. CENVAT credit - services procured from CHA towards clearance of appellant s goods - duty paying documents - invoice which was produced before the lower authorities for availment of cenvat credit is not in the name of the appellant - Held that - In the absence of any other evidence to show that the said services were in fact received by the appellant, the lower authorities were correct in coming to a conclusion of denying the cenvat credit to the appellant - demand with interest upheld - penalty set aside as he was under the bonafide belief that they are eligible for availment of cenvat credit of the service tax paid on various services which are utilised for manufacturing of goods. Appeal allowed - decided partly in favor of appellant.

Summary

Issues:
1. Denial of cenvat credit on service tax paid on insurance premium of vehicles used for despatch of goods.
2. Denial of cenvat credit on services procured from CHA for clearance of goods.

Analysis:

Issue 1: Denial of cenvat credit on service tax paid on insurance premium of vehicles used for despatch of goods

In the first two appeals, the appellant contested the denial of cenvat credit on the service tax paid on the insurance premium of vehicles used for despatch of goods. The adjudicating authority and the first appellate authority held that such cenvat credit was not eligible and needed to be denied. The appellant argued that the vehicles were used for various purposes within the plant, including movement of waste, collection of materials, and transportation of visitors. The Tribunal noted that post 01.04.2011, the definition of 'input services' had changed, making the availing of cenvat credit on the service tax paid on insurance premium ineligible. The Tribunal upheld the denial of cenvat credit in these appeals but found the penalties imposed by the lower authorities unwarranted. The Tribunal set aside the penalties, considering the appellant's bonafide belief based on a previous Tribunal order allowing such credit.

Issue 2: Denial of cenvat credit on services procured from CHA for clearance of goods

In the third appeal, the issue was the denial of cenvat credit on services procured by the appellant from a Customs House Agent (CHA) for the clearance of goods. The invoice presented for availing cenvat credit was not in the appellant's name, leading the lower authorities to deny the credit. The Tribunal agreed with the lower authorities, stating that without additional evidence showing the services were actually received by the appellant, the denial of cenvat credit was justified. However, similar to the first issue, the Tribunal found no need to impose a penalty on the appellant in this case. The Tribunal set aside the penalty, considering the appellant's genuine belief in the eligibility for cenvat credit on services utilized for manufacturing goods.

In conclusion, the Tribunal disposed of all appeals, upholding the denial of cenvat credit in both cases but setting aside the penalties imposed on the appellant due to their bonafide belief and previous Tribunal rulings.