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2024 (7) TMI 58 - AT - Central Excise100% EOU under the EHTP scheme - utilization of CENVAT Credit availed in the respect of input services for payment of NCCD leviable on clearance of the Mobile Phones in DTA - Recovery of NCCD under the proviso to Section 11A of Central Excise Act 1944 with interest and penalty - HELD THAT - From the decision in BAJAJ AUTO LIMITED VERSUS UNION OF INDIA OTHERS 2019 (3) TMI 1427 - SUPREME COURT , it is quite evident that NCCD levied under Section 136 of the Finance Act, 2001 is essentially an 'duty of excise and all the provisions relating to the manner of collection as well as obligation of taxpayer to discharge the duty as applicable to payment of Central Excise duty shall apply. There is no restriction on payment of basic excise duty from the Cenvat Credit taken in respect of input services received by the appellant. Thus the view that credit of service tax could not have been utilized for payment of NCCD cannot be upheld. There are no merits in the impugned order and the same is set aside - appeal allowed.
Issues Involved:
1. Whether the amount of NCCD paid by utilizing the credit of service tax is recoverable. 2. Whether interest on the amount of NCCD paid by utilizing the credit of service tax is recoverable. 3. Whether penalty on the party is imposable. Issue-Wise Detailed Analysis: 1. Recovery of NCCD Paid Using Service Tax Credit: The primary issue was whether the appellant could utilize the CENVAT Credit availed in respect of input services for the payment of NCCD on mobile phones cleared in the Domestic Tariff Area (DTA). The appellant argued that the CENVAT Credit Rules did not bar the utilization of service tax credit for payment of NCCD. The department contended that the proviso to Rule 3(4) of the CENVAT Credit Rules, 2004, inserted by Notification No. 10/2008-CE (NT), explicitly debarred the use of CENVAT credit of any duty or service tax, except the credit of NCCD, for payment of NCCD on goods falling under specific tariff headings. The tribunal referred to the Hon’ble Supreme Court's decision in Bajaj Auto Ltd. [2019 (366) ELT 577 (SC)], which clarified that NCCD is essentially a duty of excise. The tribunal concluded that there was no restriction on the payment of basic excise duty from the CENVAT Credit taken in respect of input services. Thus, it held that the appellant was entitled to utilize the CENVAT Credit of service tax for payment of NCCD, setting aside the department's contention. 2. Interest on NCCD Paid Using Service Tax Credit: The tribunal held that the payment of interest becomes due immediately if the due payment of the duty is not made by the specified date, as established in various case laws, including the case of CCE Bangalore-III Vs Presscom Products [2011 (268) ELT 344 (Kar.)]. The tribunal emphasized that interest is leviable on delayed or deferred payment of duty for whatever reasons, as clarified by the Hon'ble Supreme Court in Commissioner of Central Excise v. SKF India Limited [2009 (239) ELT 385 (SC)] and Commissioner of Central Excise v. International Auto Limited [2010 (250) ELT 3 (SC)]. Therefore, the tribunal upheld the recovery of interest on the amount of NCCD paid by utilizing the credit of service tax. 3. Imposition of Penalty: The tribunal noted that the show cause notice did not invoke Section 11AC of the Excise Act, but the Order-in-Original imposed a penalty under this section, which was beyond the scope of the show cause notice. The tribunal reiterated that penalties under Section 11AC require the establishment of ingredients such as suppression, fraud, or misstatement. Since there was no fraud, misstatement, or suppression of facts by the appellant, and the utilization of credit was pursuant to an earlier Order-in-Original, the tribunal found the imposition of penalty unjustified. It held that the appellant had not deliberately contravened the provisions and thus set aside the penalty imposed. Conclusion: The tribunal allowed the appeal, setting aside the impugned order. It held that the appellant was entitled to utilize the CENVAT Credit of service tax for payment of NCCD, and the recovery of interest on delayed payment was upheld. However, the imposition of penalties was found to be unjustified and was consequently set aside.
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