2019 (7) TMI 903 - AT - Central Excise

CENVAT Credit - input - High Speed Diesel (HSD) - period October 2011 to March 2015 - input services - garden maintenance service - HELD THAT - As per the definition of input, the credit on HSD is not eligible. It is brought out from the records that the appellant has availed credit only on two invoices. When they have purchased huge quantities of HSD and have availed credit only on two invoices, it can be presumed that the said availment of credit to be an inadvertent error - Credit not allowed - however, the penalty imposed is unwarranted and requires to be set aside. CENVAT credit - garden maintenance service - HELD THAT - The Hon'ble High Court in the case of RANE TRW STEERING SYSTEM LTD. VERSUS THE COMMISSIONER OF CENTRAL EXCISE AND CENTRAL TAX, CHENNAI OUTER COMMISSIONERATE 2018 (2) TMI 1745 - MADRAS HIGH COURT , which is a group company of the appellant, has held that the said credit is eligible - the disallowance of credit is unjustified and requires to be set aside. Appeal allowed in part.

Summary

Issues:
1. Availment of ineligible input credit on High Speed Diesel (HSD).
2. Availment of credit on service tax paid for garden maintenance service.

Analysis:
1. The appellants availed CENVAT credit on HSD and service tax paid on input services. The department alleged that credit on two HSD invoices and garden maintenance service was ineligible. The original authority confirmed the demand but dropped interest and imposed a 50% penalty. The Commissioner (Appeals) upheld the decision. The appellant argued that the HSD credit was an inadvertent error, rectified promptly upon audit discovery. The tribunal noted the limited HSD invoices and presumed inadvertence, setting aside the penalty. The tribunal also referenced a High Court ruling to allow credit for garden maintenance service, overturning the disallowance.

2. The appellant contended that the HSD credit was due to inadvertent error, promptly rectified. The tribunal acknowledged the limited invoices and deemed the penalty unwarranted, setting it aside. Regarding the garden maintenance service credit, the appellant argued compliance with Pollution Control Board norms, citing a High Court decision allowing such credit for a related company. The tribunal, following the High Court precedent, overturned the disallowance, allowing the credit. The tribunal set aside the penalty on HSD and allowed the credit for garden maintenance service, granting relief to the appellant as per law.