2021 (7) TMI 766 - AT - Central Excise

Utilization of CENVAT Credit on Education Cess and Secondary Higher Education Cess, for payment of Excise duty - period post amendment of Cenvat Credit Rules w.e.f. 01.03.2015 - penalty - HELD THAT - The decision by the Hon ble Delhi High Court in CELLULAR OPERATORS ASSOCIATION OF INDIA AND OTHERS VERSUS UNION OF INDIA AND ANOTHER 2018 (2) TMI 1264 - DELHI HIGH COURT has analysed the issue whether Education Cess and Secondary Higher Education Cess can be utilized for payment of service tax / excise duty after the introduction of amendments in Rules 3 (7) (b) of Cenvat Credit Rules,2004 by Notification No.12/2015-CE (NT) dt. 30.04.2015 - The demand raised under the SCN for recovery of the wrongly availed cenvat credit is legal and proper. Penalty - HELD THAT - Taking into consideration that the issue is of interpretational nature, the equal penalty imposed under Rule 15 (2) of the CENVAT Credit Rules, 2004 read with Section 11AC(c) of the Central Excise Act, 1944 is unwarranted and cannot sustain. Penalty is set aside. Impugned order is modified to the extent of setting aside penalty only without disturbing the confirmation of demand in respect of cenvat credit / duty along with interest - Appeal allowed in part.

Summary

Issues:
Whether the appellant is eligible to utilize the cenvat credit on Education Cess and Secondary & Higher Education Cess for payment of Excise duty after the amendment of Cenvat Credit Rules w.e.f. 01.03.2015.

Analysis:
The appellant's eligibility to use cenvat credit on Education Cess and Secondary & Higher Education Cess for Excise duty payment post the Cenvat Credit Rules amendment was the key issue. The appellant's counsel conceded that the matter was settled against them by a Delhi High Court decision. The counsel argued the issue was interpretational, and the penalty imposed was unwarranted, seeking its setting aside. The respondent supported the impugned order's findings, citing the decision favoring the Revenue. The High Court decision analyzed whether Education Cess and Secondary & Higher Education Cess could be utilized post the Cenvat Credit Rules amendment. The decision clarified the implications of the amendment, highlighting the limited scope of concessions and the rationale behind them. The judgment differentiated this case from previous rulings, emphasizing the distinction in treatment and the absence of a vested right for cross-utilization of credits. The demand for recovery of wrongly availed cenvat credit was deemed legal, but the imposed penalty was considered unwarranted due to the interpretational nature of the issue. Consequently, the penalty was set aside, modifying the impugned order while upholding the demand for cenvat credit/duty with interest. The appeal was partly allowed with relief as per law.

This detailed analysis of the judgment provides a comprehensive understanding of the legal issues, arguments presented, court's reasoning, and the final decision rendered by the Appellate Tribunal CESTAT CHENNAI.