2019 (7) TMI 822 - AT - Central Excise

CENVAT Credit - appellant have utilized the balance of Education Cess and secondary and Higher Secondary Education Cess - proviso 6 to Rule 16 of Chewing Tobacco and unmanufactured Tobacco Packing Machine (Capacity Determination and Collection of Duty) Rules 2010 - HELD THAT - Reliance placed in the case of CELLULAR OPERATORS ASSOCIATION OF INDIA AND OTHERS VERSUS UNION OF INDIA AND ANOTHER 2018 (2) TMI 1264 - DELHI HIGH COURT where it was held that Prior to 01.07.2010 builders/developers are not liable to pay service tax for the Construction of Residential Complex Service and in the present case, the period involved is from 16.06.2005 to 31.01.2007. Imposition of penalty - HELD THAT - It was a bona fide mistake of the appellant to utilize the CENVAT credit after the introduction of the Notification No. 12/2015-CE dated 13.04.2015 as the appellant was under impression that they can utilize the CENVAT credit on Education Cess and Higher Education Cess for payment of duty - there was no intention to evade the payment of duty. Appeal allowed in part.

Summary

Issues:
- Appeal against rejection of appellant's appeal by Commissioner (Appeals)
- Utilization of Education Cess and Higher Secondary Education Cess for payment of Excise Duty
- Imposition of penalty on the appellant
- Bona fide mistake in utilizing CENVAT credit post introduction of Notification No. 12/2015-CE

Analysis:
1. The appeal was filed against the rejection of the appellant's appeal by the Commissioner (Appeals). The appellant, a manufacturer of chewing scented tobacco/zarda, availed CENVAT credit on input services and capital goods. A show cause notice (SCN) was issued for recovery of Education Cess and Higher Secondary Education Cess utilized for payment of Excise Duty, leading to a demand of ?2,46,648/- along with interest and penalty.

2. The appellant, through its counsel, conceded on merit due to a judgment by the Hon'ble High Court of Delhi and sought dropping of the penalty. The counsel argued that the appellant's mistake in utilizing CENVAT credit post the introduction of Notification No. 12/2015-CE was bona fide, emphasizing no intention to evade duty payment, citing a relevant case law.

3. The learned AR defended the impugned order, leading to a consideration of submissions and records by the adjudicating authority. The authority acknowledged the appellant's concession on merit in line with the Delhi High Court judgment. Regarding the penalty, it was deemed a bona fide mistake by the appellant, as they believed they could use CENVAT credit for Education Cess and Higher Education Cess. Consequently, the penalty was set aside, and the duty demand with interest was confirmed, partially allowing the appeal.

4. The judgment highlighted the appellant's genuine mistake in utilizing CENVAT credit post the specified notification, leading to a decision favoring the appellant on the penalty issue. The ruling emphasized the absence of intent to evade duty payment, aligning with relevant legal precedents and resulting in the partial allowance of the appeal.