2018 (8) TMI 468 - AT - Central Excise

CENVAT Credit - it was alleged that certain duty paying documents for input services had been raised on the Regional Sales Offices, instead of the Head Office of the company - Held that - The CENVAT invoices should be verified and the matter should be decided accordingly. Penalty u/s 78 - Held that - There is no material on record to establish fraud, collusion, willful misstatement or suppression of facts on the part of the appellant. Therefore, penalty under Section 78 of the Finance Act is unwarranted and is set aside. Appeal allowed by way of remand.

Summary

Issues:
1. Recovery of CENVAT Credit availed by the appellant.
2. Validity of raising duty paying documents on Regional Sales Offices.
3. Imposition of penalty under Section 11AC of the Central Excise Act.
4. Verification of cenvat invoices.
5. Penalty under Section 78 of the Finance Act.

Analysis:

1. The case involved the recovery of CENVAT Credit availed by the appellant for input services raised on Regional Sales Offices instead of the Head Office. The appellant argued that the services were part of sales promotion activities and that the receipt or use of input services in a specific factory premise is not a condition under the Cenvat Credit Rules, 2004. The appellant cited relevant case laws to support their argument. The Revenue, however, relied on the judgment of the Hon'ble Supreme Court in a similar case.

2. The issue of raising duty paying documents on Regional Sales Offices was a point of contention. The appellant claimed that the services for which bills were raised on the Regional Sales offices were actually provided to them. The appellant's counsel argued that the extended period of limitation was not available to the department, hence penalty under Section 11AC of the Central Excise Act could not be imposed.

3. The Adjudicating Authority confirmed the demand for recovery of CENVAT Credit along with interest and imposed a penalty. The Commissioner (Appeals) upheld this decision. However, the Tribunal, after hearing both sides and perusing the records, found no evidence to support allegations of willful misstatement, suppression, fraud, or collusion on the part of the appellant. Citing a judgment of the Hon'ble High Court, the Tribunal set aside the penalty under Section 78 of the Finance Act.

4. The Tribunal emphasized the need to verify the cenvat invoices and instructed the matter to be decided accordingly. The Tribunal highlighted the importance of establishing fraud, collusion, willful misstatement, or suppression of facts to warrant a penalty under Section 78 of the Finance Act. As no such evidence was found, the penalty was deemed unwarranted, and the matter was remanded to the Adjudicating Authority for further verification and a decision in accordance with the law.

5. In conclusion, the Tribunal modified the impugned order, setting aside the penalty under Section 78 of the Finance Act and remanding the matter for verification of documents. Both parties were granted the opportunity to present evidence, and the appeal filed by the appellant was disposed of accordingly.