2018 (10) TMI 819 - AT - Central Excise

CENVAT Credit - input services - courier service utilized for delivery of goods at the buyer s premises - place of removal - demand of Interest and penalty - Held that - The issue with regard to availment of Cenvat Credit on GTA/courier service for delivery of goods at the buyers premises is no more res integra, in view of judgment of Hon ble Supreme Court in the case of Ultratech Cements Ltd 2018 (2) TMI 117 - SUPREME COURT OF INDIA , where it was held that Cenvat Credit on goods transport agency service availed for transport of goods from place of removal to buyer s premises was not admissible to the respondent - credit rightly denied. Demand of Interest - Held that - The appellant had sufficient balance in its Cenvat account during the disputed period. Thus, it is evident that the disputed credit had not been utilized by the appellant for payment of Central Excise duty on the final product cleared by it. Therefore, under the amended provisions of Rule 14 of the Cenvat Credit rules, 2004, since the credit has not been utilized, no interest shall be demanded from the appellant. Demand of Penalty - Held that - It is not a case that taking of regular credit by the appellant is owing to the reason of fraud, collusion, suppression of facts etc., with intent to defraud the Government revenue. Since the appellant had availed the credit based on the earlier circular issued by the CBEC, it cannot be said that the appellant had indulged into the fraudulent activity - the provisions of Rule 15(2) of the rules read with Section 11 of the Act cannot be invoked for imposition penalty. The impugned order, so far as it denied the Cenvat benefit on courier service, sustains. Interest and penalty confirmed therein is set aside - Appeal allowed in part.

Summary

Issues: Denial of Cenvat Credit on courier service for delivery of goods; Legality of interest amount and penalties imposed.

Denial of Cenvat Credit on courier service for delivery of goods:
The appeal addressed the denial of Cenvat Credit on courier services used for delivering goods to the buyer's premises. The authorities contended that the place of removal for the appellant was the factory gate, and services utilized up to that point should be considered as input services for Cenvat Credit, not extending beyond the factory gate. The appellant did not contest the disallowance of Cenvat Credit on the courier service. However, the legality of the interest amount confirmed and penalties imposed was challenged, arguing that the period of dispute fell under post-amended provisions of Rule 14 of the Cenvat rules and lacked elements of suppression or fraud.

Legality of interest amount and penalties imposed:
The learned advocate for the appellant argued against the interest amount and penalties imposed, stating that there was no suppression or fraud involved in taking irregular Cenvat Credit. The revenue department, represented by the learned DR, supported the findings in the impugned order and cited a judgment of the Hon'ble Supreme Court in the case of Ultra Tech Cement Ltd., emphasizing that courier services used beyond the place of removal should not be eligible for Cenvat benefits. The Tribunal concurred with the impugned order, denying Cenvat benefit on the courier service based on the Supreme Court judgment. It was noted that the appellant had a sufficient balance in the Cenvat account during the disputed period and had not utilized the disputed credit for paying Central Excise duty on the final product. Therefore, under the amended provisions of Rule 14, no interest could be demanded. Since there was no fraudulent intent or suppression of facts in availing the credit, penalties under Rule 15(2) and Section 11 of the Act were deemed inapplicable.

Conclusion:
The Tribunal upheld the impugned order's decision to deny Cenvat benefit on the courier service but set aside the interest and penalties imposed. The appeal was partly allowed by overturning the interest and penalty confirmed on the appellant.