2021 (9) TMI 586 - AT - Central Excise

Levy of penalty u/s 11AC - Wrongful availment of CENVAT Credit - input services - rent a cab operator service - contribution of employee recovered by the appellant - Suppression of facts or not - HELD THAT - Under section 11AC penalty can be imposed only when the demand is confirmed invoking proviso to section 11A (1). In this case though the demand was confirmed invoking proviso to section 11A (1) and the appellant has not contested the said demand and they have paid the same along with interest. However, they are contesting the imposition of penalty on the ground that there is no ingredients existing as to the facts of this case whereby the proviso to section 11A (1) can be invoked. It is a settled law that when there is a doubt and difference of views on issue and subsequently it is settled by any court of law, the suppression or intention to evade the duty cannot be alleged in such cases. Even though the extended period was not invokable in the facts of the present case. The appellant have paid the said amount along with interest, which is not under contest - since there is no suppression of fact or misdeclaration, fraud or intent to evade duty on the part of the appellant, the penalty under section 11AC cannot be invoked. Appeal allowed in part.

Summary

Issues: Liability to penalty under section 11AC for wrong availment of credit on the contribution of employee recovered against the service of rent a cab operator service.

Analysis:
The judgment by the Appellate Tribunal CESTAT Ahmedabad involved the issue of whether the appellant is liable to penalty under section 11AC for wrongly availing credit on the contribution of an employee recovered against the service of a rent a cab operator. The appellant did not contest the disallowance of credit and the interest already paid. The appellant argued that there was no intention to avail the credit wrongly, citing a decision by the Hon'ble Bombay High Court in a previous case. The Revenue, represented by the Superintendent, contended that once the demand is confirmed invoking a specific provision, the penalty under section 11AC becomes mandatory, as per previous judgments by the Hon'ble Supreme Court. The Tribunal considered both sides' submissions and found that the penalty was imposed for wrong credit availment under section 11AC, which can only be imposed when the demand is confirmed invoking a specific provision. The appellant's argument was based on the lack of ingredients for invoking the specific provision. The Tribunal agreed with the appellant's submission that there was an interpretation issue regarding the credit attributable to the contribution of an input service, which was later clarified by the Hon'ble Bombay High Court. Since there was no suppression of facts or intent to evade duty, the Tribunal concluded that the penalty under section 11AC could not be invoked. Consequently, the Tribunal set aside the penalty and allowed the appeal to that extent.