2018 (9) TMI 1574 - AT - Central Excise

Penalty - CENVAT credit - ineligible import duty - Services for repair re-conditioning restoration, decoration or any other similar services of Motor Vehicle - insurance of vehicles - credit was reversed admittedly by the appellant along with interest - Held that - As Ld. Counsel fairly conceded that they are not contesting the Cenvat Credit demand, therefore, demand in this regard stand upheld - as per Board Circular No. 208/07/2008-CE-6 dated 25.05.2008, the adjudicating authority must give option of 25% of penalty in the order - the penalty reduced to 25% of demand of Cenvat Credit upheld subject to condition that such demand, interest and 25% penalty stand paid within one month from the date of receipt of this order. CENVAT credit - Outdoor catering service - Held that - This service was availed for Event management programme for completion of 25 years of the company, therefore, it is a function organised for the company and not for any individual. Therefore, it cannot be said that the outdoor catering service was availed by any individual for personal consumption - demand set aside. CENVAT credit - travel services extended to Directors, their family members and employees - Held that - The credit is admissible only when the travelling service is for the purpose of Official work but in the present case the travelling service for leisure trip - Credit not allowed. CENVAT credit - Security service - denial only on the ground that the Service Tax should have been paid on reverse charge basis by the appellant whereas, the Service Tax was admittedly paid by the service provider - Held that - As per the Cenvat Credit Rules, the Cenvat Credit is admissible so long the service is input service and same is Service Tax paid. Therefore, even Service Tax is paid by the service provider the credit of such Service Tax cannot be denied on inputs service received by the appellant - There is no dispute that the Security Services is liable for Service Tax and Service Tax was admittedly paid, therefore, credit is legally admissible to the appellant - credit allowed. Appeal allowed in part.

Summary

Issues:
1. Denial of Cenvat Credit for ineligible import duty, repair of motor vehicle, and insurance of vehicles.
2. Contesting penalty for Cenvat Credit on service tax paid for repair, reconditioning, and outdoor catering services.
3. Dispute over Cenvat Credit on service tax paid for travel services extended to directors, family members, and employees.
4. Denial of Cenvat Credit on security services due to payment method.
5. Appellant's request for waiver of penalty.

Analysis:

1. The appellant availed Cenvat Credit for ineligible import duty, repair of motor vehicles, and insurance of vehicles, which were reversed along with interest. The appellant did not contest the denial of credit for these items, acknowledging the ineligibility. The penalty waiver was sought for the equal amount imposed by the Lower Authority.

2. The contest over penalty for Cenvat Credit on service tax paid for repair, reconditioning, and outdoor catering services was addressed. The appellant argued that the outdoor catering service was for an event organized by the company, not for personal consumption, citing relevant judgments. The Tribunal set aside the demand for Cenvat Credit on outdoor catering but upheld the demand for repair and reconditioning services.

3. Regarding the dispute over Cenvat Credit on service tax paid for travel services, it was noted that the services were for leisure travels by family members of directors and employees, not for official work. The Tribunal upheld the demand for Cenvat Credit on traveling services, emphasizing that credit is admissible only for official purposes, not personal consumption.

4. The denial of Cenvat Credit on security services due to the payment method was discussed. The appellant argued that since the Service Tax was paid by the service provider, the credit should be admissible. The Tribunal agreed, stating that as long as the service is an input service and Service Tax is paid, the credit cannot be denied based on the payment method. The demand for Cenvat Credit on security services was set aside.

5. The appellant's request for waiver of penalty was considered. The Tribunal noted that the adjudicating authority did not provide the option of a 25% penalty as required by law. Following relevant Supreme Court judgments and circulars, the penalty was reduced to 25% of the upheld demand, with a condition for timely payment.

In conclusion, the Tribunal partially allowed the appeal, setting aside the demand for Cenvat Credit on outdoor catering and security services but upholding it for repair, reconditioning, motor vehicle, and travel services. The penalty was reduced to 25% of the upheld demand, subject to timely payment.