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2019 (4) TMI 1598 - AT - Service TaxDemand of Interest and penalty - irregular availment of CENVAT credit, nut not utilized - allegation against the appellant is that they have availed 100% CENVAT credit on capital goods instead of only 50% of the credit - HELD THAT - This issue is no more res integra and has been settled by the jurisdictional High Court of Karnataka in the case of COMMISSIONER OF CENTRAL EXCISE SERVICE TAX LARGE TAXPAYER UNIT, BANGALORE VERSUS M/S BILL FORGE PVT LTD, BANGALORE 2011 (4) TMI 969 - KARNATAKA HIGH COURT has held that the assessee is not liable to pay interest if he has not utilized the CENVAT credit and there was sufficient CENVAT credit in the books of the assessee during the relevant time. Demand of interest and penalty do not sustain - appeal allowed - decided in favor of appellant.
Issues:
1. Appeal against Commissioner (Appeals) order dated 30.12.2016 and 19.04.2017. 2. Allegation of availing 100% CENVAT credit on capital goods instead of 50%. 3. Demand of interest and penalty under Rule 14 and 15(1) of the CCR, 2004. 4. Applicability of interest on mere availment of credit without utilization. 5. Interpretation of Rule 14 of the CENVAT Credit Rules. 6. Jurisdictional High Court and Tribunal decisions on interest payment. Detailed Analysis: 1. The appellants filed appeals against the Commissioner (Appeals) order rejecting one appeal and enhancing penalty in another. Both cases were interconnected, leading to a common disposal. 2. The appellant, a Public Sector Undertaking, faced allegations of availing 100% CENVAT credit on capital goods instead of the prescribed 50%. A show cause notice (SCN) was issued proposing interest and penalty under Rule 14 and 15(1) of the CCR, 2004. 3. The Additional Commissioner confirmed the demand of interest and imposed a penalty of ?100, later reduced to ?6,99,525. The Commissioner (Appeals) rejected the appeal, leading to further appeals by both parties regarding the penalty amount. 4. The appellant argued that interest was wrongly demanded, citing legal precedents differentiating between availing credit and utilization. They referenced judgments highlighting that interest is not payable on mere availment without utilization. 5. The appellant's position was supported by decisions of the Hon'ble High Courts and the Madras High Court, emphasizing the distinction between availing and utilizing credit under Rule 14 of the CENVAT Credit Rules. 6. The Assistant Commissioner defended the impugned order, asserting the appellant's liability to pay interest for wrongly availing credit. They cited various decisions supporting their stance. 7. The Tribunal analyzed the issue considering precedents and legal interpretations. Referring to the jurisdictional High Court's decision and Tribunal rulings, it concluded that interest is not payable on mere availment of credit if not utilized. The impugned order was set aside, allowing the appeal with consequential relief. This comprehensive analysis covers the issues raised in the legal judgment, detailing the arguments presented by both parties and the Tribunal's final decision based on legal precedents and interpretations.
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