2019 (8) TMI 385 - AT - Service Tax

Excess availment of CENVAT Credit - credit availed in excess of what was available in the Centvat Credit Register for the period October, 2013 to March 2014 - demand alongwith interest and penalty - HELD THAT - Allegation against the appellant is that it had availed Cenvat Crdit in excess of its availability to the appellant for which Rule 14 is violated, though no such wording is available in Rule 14 called availed . On the other hand, it uses terms like Cenvt Credit taken , utilised wrongly , erroneously refunded . Availment by its Dictionary meaning would mean to make use of something but the record reveals that the amount was taken in the books of accounts in excess of what was available to the appellant. A bare reading of Rule 14 would clearly lead to a conclusion that Cenvat Credit after being utilised wrongly can only be recovered as per provision of section 11A, 11AA of the Excise Act and Section 73 and 75 of the Finance Act since the word and is bridged between taken and utilised . In the instance case credit is only shown in ST-3 return to have been taken but not utilised though it was wrong a credit taken as amount has been entered twice, which SCN also admits to be a mistake committed by the appellant. Appeal allowed.

Summary

Issues:
Confirmation of demand on availment of Excess Cenvat Credit; Legal aspects of Audit conducted by departmental Officer under Rule 5A; Recovery of wrongly availed Cenvat Credit; Interpretation of Rule 14 of Cenvat Credit Rules.

Confirmation of demand on availment of Excess Cenvat Credit:
The case involved an appeal against the confirmation of demand on availment of Excess Cenvat Credit by the Commissioner (Appeals) of GST & Central Excise. The Appellant had availed Cenvat Credit in excess of what was available in the Cenvat Credit Register for a specific period. The Appellant argued that there was no excess availment of credit, as shown in the reconciliation statement submitted to the department before the Show Cause Notice was issued. The Appellant claimed that the credit was wrongly reflected in their account twice and was not utilized. The Commissioner (Appeals) upheld the demand, citing certain case laws. The Tribunal analyzed the facts and ruled in favor of the Appellant, setting aside the Order-in-Appeal.

Legal aspects of Audit conducted by departmental Officer under Rule 5A:
During the appeal, the Appellant's counsel referred to judicial decisions regarding the legality of audits conducted by departmental officers under Rule 5A. The Appellant argued that the audit findings were based on incorrect assumptions and that the wrongly availed Cenvat Credit should only be recovered from the Manufacturer or Service Provider, not the Input Service Distributor. The Tribunal examined the submissions and found that the Appellant had made a wrong entry of Cenvat Credit in their accounts, leading to the double availment of credit. The Tribunal concluded that the recovery of wrongly taken credit should be in accordance with the relevant provisions of the Excise Act and the Finance Act.

Recovery of wrongly availed Cenvat Credit:
The Tribunal delved into the interpretation of Rule 14 of the Cenvat Credit Rules, which governs the recovery of wrongly taken or erroneously refunded Cenvat Credit. The rule stipulates that such credit shall be recovered from the manufacturer or provider of the output service. The Tribunal analyzed the language of the rule and concluded that the recovery can only be made if the credit was utilized wrongly. In this case, although the credit was taken erroneously, it was not utilized, as per the ST-3 return. Therefore, the Tribunal allowed the appeal and set aside the Order-in-Appeal issued by the Commissioner.

This detailed analysis of the judgment covers the issues raised in the case, providing a comprehensive understanding of the legal aspects and the Tribunal's decision.