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2009 (9) TMI 261 - AT - Central ExciseCenvat Credit- output services-Classification- The assessee was engaged in providing the output service of site formation and clearance services, the assessee had purchased capital goods like excavators, dozers, craters and tippers. The invoice issued by manufacturer for the sale of tippers to the assessee indicated Chapter sub-heading as 8704.239. The said classification had been accepted by the revenue. The assessee availed of the Cenvat Credit of excise duty paid on tippers. The adjudicating authority denied the benefit of Cenvat credit of excise duty paid on tippers on the ground that assessee has availed an ineligible credit, thus confirm the demand for reversal of credit. Held that- the impugned order is valid to the extent it directs the assessee to reverse the ineligible credit but set aside the order to the extent it imposed penalty and interest.
Issues Involved:
1. Irregular availment of Cenvat Credit on ineligible capital goods (Tippers). 2. Availment of Cenvat Credit based on invalid documents. 3. Liability to pay interest on the inadmissible Cenvat Credit. 4. Imposition of penalty for wrongful availment of Cenvat Credit. 5. Penal action for contraventions of the Rules and the Act. 6. Penalty for delayed filing of ST-3 returns. 7. Liability to pay back the inadmissible credit with interest and penalty. Issue-wise Detailed Analysis: 1. Irregular Availment of Cenvat Credit on Ineligible Capital Goods (Tippers): The appellant availed Cenvat Credit on Tippers, which were classified under Chapter 87. The Cenvat Credit Rules specifically exclude motor vehicles from the definition of capital goods unless they fall under specified chapters (82, 84, 85, 90). The Tribunal found that the Tippers, classified under Chapter 87, do not qualify as capital goods for Cenvat Credit. The appellant's reliance on the Tribunal's decision in the case of Dipco Metal Fabricators (P.) Ltd. was misplaced as the classification of Tippers under Chapter 87 by the manufacturer (Volvo) was undisputed and accepted by the revenue. Therefore, the credit availed was deemed inadmissible. 2. Availment of Cenvat Credit Based on Invalid Documents: The appellant availed credit based on 11 Tax Invoices and 18 Extra copies of Invoices, which did not conform to Rule 9 of the Credit Rules read with Rule 11 of the Central Excise Rules, 2002. The adjudicating authority held that the credit taken on these invalid documents was inadmissible. 3. Liability to Pay Interest on the Inadmissible Cenvat Credit: The Tribunal found that the interest liability under Rule 14 of the Credit Rules read with Section 75 of the Act was unwarranted. The appellant had not utilized the credit availed, and it remained as a credit entry in the records. The Tribunal referred to the case of Gokaldas Images (P.) Ltd., where it was held that if the credit remains unutilized, the demand for interest is not justified. 4. Imposition of Penalty for Wrongful Availment of Cenvat Credit: The adjudicating authority imposed a penalty under Rule 15 of the Credit Rules. However, the Tribunal found that the penalty was unwarranted due to the appellant's bona fide belief that the Tippers were eligible for credit based on their use in providing taxable output services. The Tribunal set aside the penalty, noting the appellant's reliance on the decision in the case of Dipco Metal Fabricators (P.) Ltd. 5. Penal Action for Contraventions of the Rules and the Act: The adjudicating authority imposed a penalty of Rs. 1,000 under Section 77 of the Act for late filing of ST-3 returns. The Tribunal upheld this penalty, as the contravention was clear and undisputed. 6. Penalty for Delayed Filing of ST-3 Returns: The penalty of Rs. 1,000 imposed under Section 77 of the Act for delayed filing of ST-3 returns was upheld by the Tribunal, as the appellant did not contest this aspect. 7. Liability to Pay Back the Inadmissible Credit with Interest and Penalty: The Tribunal upheld the adjudicating authority's order directing the appellant to reverse the ineligible credit taken on Tippers. However, the interest and penalty imposed were set aside due to the appellant's bona fide belief and the credit remaining unutilized. Conclusion: The Tribunal upheld the order to reverse the ineligible credit but set aside the imposition of interest and penalty under Rule 15 of the Credit Rules. The penalty for delayed filing of ST-3 returns was upheld. The appeal was disposed of accordingly.
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