2019 (7) TMI 253 - AT - Central Excise

CENVAT Credit - input services - outdoor catering service - whether the appellant is eligible for credit of outdoor catering services after 01.04.2011? - HELD THAT - The appellant is not eligible for the credit on outdoor catering services to the tune of ₹ 18,39,016/-. Therefore, recredit taken by the appellant is not correct and on this score, the demand raised is legal and proper. Penalty - HELD THAT - The issue of eligibility of credit on outdoor catering services being interpretational issue, the appellant cannot be saddled with intention to evade payment of duty - the penalty imposed is set aside. Appeal allowed in part.

Summary

Issues:
1. Eligibility of credit on outdoor catering services under CCR 2004.
2. Validity of the demand raised for recredit of inadmissible cenvat credit.
3. Imposition of penalties on the appellant.

Analysis:

Issue 1: Eligibility of credit on outdoor catering services under CCR 2004
The appellants availed cenvat credit on outdoor catering services, which the department deemed ineligible. The issue was whether the appellant could claim credit on such services after 01.04.2011. The Tribunal had previously decided on this matter in a batch of cases, concluding that the appellant was not entitled to credit on outdoor catering services. The appellant had already reversed the credit but later reavailed it, prompting the current demand for recredit. The Tribunal affirmed that the appellant was not eligible for the credit on outdoor catering services, amounting to ?18,39,016. The demand for recredit was considered legal and proper, given the previous Tribunal decision on the same issue.

Issue 2: Validity of the demand raised for recredit of inadmissible cenvat credit
The appellant argued against the demand for recredit, citing a previous case (Appeal No. E/41631/2018) where a similar demand was confirmed. The appellant contended that there should not be a double demand for the same issue. However, the Tribunal upheld the demand for recredit, emphasizing that the appellant was not eligible for the credit on outdoor catering services. The Tribunal noted that the demand had already been confirmed in a previous case, and the current demand was justified.

Issue 3: Imposition of penalties on the appellant
Regarding the penalties imposed on the appellant, the Tribunal considered the issue of eligibility for credit on outdoor catering services as interpretational. Since the appellant could not be assumed to have intended to evade duty, the penalty was deemed unnecessary and set aside. The Tribunal ruled in favor of the Revenue on the eligibility of credit issue but decided to annul the penalty due to the interpretational nature of the matter. Consequently, the appeal was partly allowed by setting aside the penalty, with any consequential benefits to be provided as per law.