2020 (1) TMI 806 - AT - Service Tax

Demand of interest and penalty - CENVAT credit wrongly on Additional Duty of Customs - Section 3(5) of Customs Tariff Act - irregularly availed credit reversed on being pointed out - HELD THAT - The appellants have reversed the CENVAT credit of ₹ 24,14,131/- availed on Special additional duty and the same was reversed in March 2017 as shown in the relevant Returns furnished in the Court. Further, this reversal was done before the issue of SCN which was issued on 18.05.2017. Further, the appellants have filed ST Returns for various periods to show that they have enough balance as unutilized amount of CENVAT credit almost in all periods from the quarter of availment of CENVAT credit (October 2013 to March 2014) to the quarter in which the said amount is reversed (October 2016 to March 2017) to cover the said availment of CENVAT credit of ₹ 25,84,886/- which includes the wrongly taken credit of Customs Cess paid amounting to ₹ 1,70,755/- in respect of Bill of Entry No. 9247243 dated 07.02.2013 which the consultant has agreed to pay. The present appeal is allowed by way of remand to the Original Authority to verify the quantum of reversal allegedly made by the appellant amounting to ₹ 24,14,131/- and also to verify whether the appellant had sufficient balance of unutilized amount of CENVAT credit during all the periods from the date of availment till reversal - Appeal allowed by way of remand.

Summary

Issues:
1. Incorrect availing of CENVAT credit on Additional Duty of Customs.
2. Rejection of appeal by Commissioner (A).
3. Applicability of penalty and interest.

Analysis:
1. The appeal challenged the order passed by the Commissioner (A) rejecting the appellant's appeal regarding the incorrect availing of CENVAT credit on Additional Duty of Customs. The appellant, engaged in providing services, was found to have wrongly taken CENVAT credit of ?25,84,886, leading to a Show Cause Notice (SCN) being issued to disallow and recover the ineligible credit. The Deputy Commissioner confirmed the demand and imposed a penalty under Rule 15(2) of CCR. The appellant contended that the credit was reversed voluntarily upon audit detection, citing it as a bona fide mistake without intent to evade duty. The appellant argued against the imposition of penalty and interest based on their actions and the available CENVAT balance.

2. The Commissioner (A) upheld the decision, prompting the appeal. The appellant argued that the impugned order lacked legal sustainability due to a failure in properly appreciating the facts and law. The appellant emphasized the voluntary reversal of credit, absence of intent to evade duty, and cited a judgment to support their stance. The Authorized Representative defended the impugned order during the hearing.

3. After hearing both parties and examining the records, the Judicial Member found that the appellant had indeed reversed a portion of the wrongly availed CENVAT credit before the issuance of the SCN. The Member noted the appellant's sufficient unutilized CENVAT balance during various periods, covering the wrongly taken credit. However, the appellant only provided proof of reversal for a partial amount, leaving a balance to be paid along with interest. The Member allowed the appeal by remanding the case to the Original Authority to verify the reversal amount, assess the unutilized credit balance, and quantify the outstanding demand and interest. The decision was made to ensure a comprehensive verification and calculation, leading to the appeal being allowed by way of remand.