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2023 (1) TMI 688 - AT - Central ExciseCENVAT Credit - Education Cess and Secondary Higher Education Cess under the invoice issued by the 100% EOU - appellant s submission is that the denial of Education Cess was not subject matter of show cause notice - HELD THAT - From the proposal in the show cause notice, it can be seen that the demand of Cenvat Credit is not only in respect of basic Excise duty but also of Education Cess and Secondary Higher Education Cess. Therefore, in this fact it cannot be said that the order denying the Cenvat credit on Education Cess and Secondary Higher Education Cess is travelling beyond the scope of show cause notice. Hence, the demand was rightly made by the adjudicating authority. Accumulation of unutilized credit of Education Cess and Secondary and Higher Education Cess while switching over to the GST regime - HELD THAT - This fact can be examined at the time of recovery of the amount confirmed in the impugned order. Hence, there are no conclusive finding on the said submission. Penalty imposed on Shri. Suresh Nair employee of the appellant s Company - HELD THAT - The issue of correct calculation of Cenvat Credit on the invoice issued by the 100% EOU was always in dispute, therefore, malafide cannot be attributed to the employee of the Company in the facts of the present case. Moreover, he is not beneficiary of any wrong doing by the Company. Accordingly, considering the peculiar facts of the present case, the penalty Shri. Suresh Nair employee of the Company cannot be imposed under Rules 26 of the Central Excise Rules, 2002. Hence, penalty on Shri. Suresh Nair is not sustainable, accordingly, set aside. Appeal disposed off.
Issues:
1. Denial of Cenvat credit on Education Cess and Secondary & Higher Education Cess by the Commissioner. 2. Scope of show cause notice in relation to the denial of Cenvat credit. 3. Accumulated unutilized credit of Education Cess and Secondary & Higher Education Cess during the switch to GST regime. 4. Imposition of penalty on an employee of the appellant's company. Analysis: 1. The appeal challenged the de novo order denying Cenvat credit on Education Cess and Secondary & Higher Education Cess issued by a 100% EOU. The appellant argued that the denial was beyond the show cause notice scope, as the Education Cess was excluded before the notice. The appellant also highlighted the unutilized credit balance during the GST regime switch, leading to lapsing of the credit balance. The revenue representative supported the denial, stating the appellant was ineligible for the credit. The Tribunal noted the lack of dispute on the ineligibility but focused on whether the denial was within the show cause notice's ambit. 2. The Tribunal examined the show cause notice, which proposed the demand for Cenvat credit, including Education Cess and Secondary & Higher Education Cess. As the notice explicitly mentioned these components, the Tribunal concluded that the denial of credit on these items was not beyond the notice's scope. Therefore, the demand for Cenvat credit was deemed valid by the adjudicating authority. 3. Regarding the accumulated unutilized credit of Education Cess and Secondary & Higher Education Cess during the transition to the GST regime, the Tribunal decided that this aspect could be addressed during the recovery of the confirmed amount. No definitive finding was given on this matter during the current proceedings. 4. The penalty imposed on an employee of the appellant's company was scrutinized by the Tribunal. Given the ongoing dispute over the correct calculation of Cenvat Credit, the Tribunal found no malafide intent on the employee's part. As the employee was not a beneficiary of any wrongdoing by the company, the penalty under the Central Excise Rules was deemed unsustainable and subsequently set aside. The appeal of the company was dismissed, while the appeal of the employee was allowed. This detailed analysis of the judgment from the Appellate Tribunal CESTAT AHMEDABAD provides a comprehensive overview of the issues raised, the arguments presented by both parties, and the Tribunal's findings on each matter.
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