2018 (5) TMI 115 - AT - Service Tax

CENVAT credit - capital goods - Tower and Tower materials - assessee failed to make any observation that this credit should have been spread over in two financial years - interest - penalty - Held that - the respondents are liable to pay interest for taking the credit of 50% of credit in advance on the capital goods allowed by the learned Commissioner - to ascertain the quantum of interest the matter is remanded to the learned Commissioner - matter on remand. Penalty u/r 15(1) of the CCR 2004 - Held that - penalty itself is not imposable in view of the judgment of the Hon ble Gujarat High Court in the case of Asstt. Commissioner of Central Goods & Service Tax, Division-VIII (Vejalpur) Vs. Vodafone Essar Gujarat Ltd. 2017 (10) TMI 82 - GUJARAT HIGH COURT - penalty set aside. Appeal disposed off.

Summary

Issues:
- Appeal filed by Revenue against Order-in-Original
- Eligibility of CENVAT Credit on towers and tower materials
- Allocation of credit over financial years
- Imposition of interest and penalty under CENVAT Credit Rules

Analysis:
- The appeal was filed by the Revenue against an Order-in-Original passed by the Commissioner of Central Excise & Service Tax, Ahmedabad. The case involved the eligibility of CENVAT Credit on towers and tower materials used in providing Telecommunication services. The Revenue contended that the credit availed by the appellant should have been spread over two financial years as per Rule 4(2)(a) of the CENVAT Credit Rules, 2004. The Commissioner had confirmed a demand for a portion of the credit and imposed a penalty under Rule 15(3) of the CENVAT Credit Rules, 2004.

- The Revenue argued that interest should be paid on the excess credit availed in the same financial year, as the appellant had taken the entire credit upfront. The Tribunal found merit in this argument, stating that the credit should have been spread over two financial years. The matter was remanded to the Commissioner to determine the amount of interest payable by the appellant for taking credit in advance on capital goods.

- Regarding the penalty imposed under Rule 15(3) of the CENVAT Credit Rules, 2004, the Tribunal referred to a judgment of the Hon'ble Gujarat High Court in a similar case and concluded that no penalty is imposable under Rule 15(1) of the CENVAT Credit Rules, 2004. As a result, the Tribunal remanded the case solely for the purpose of calculating the interest amount, disposing of both the Revenue's appeal and the cross-objection filed by the respondent.

This detailed analysis highlights the key issues addressed in the judgment, including the eligibility of CENVAT Credit, allocation of credit over financial years, and the imposition of interest and penalty under the CENVAT Credit Rules.