2010 (3) TMI 578 - AT - Service Tax

Cenvat Credit - The issue involved in this case is that the respondents herein have availed benefit of Cenvat credit on the inputs and input services. Show-cause notice was issued denying them the service tax credit availed on the above-mentioned services. The adjudicating authority vide his Order-in-Original held that the credit taken is irregular and confirmed the demanded amount and appropriated the amount already paid. The adjudicating authority has also demanded interest and imposed equal amount of penalty. Commissioner (Appeals) set aside order on ground of limitation but upheld order. Held that - since findings of Commissioner (Appeals) on limitations was not challenged by revenue in its grounds of appeal, impugned order was held to be accepted by revenue and appeal was to be rejected.

Summary

Issues Involved:
- Availing benefit of Cenvat credit on inputs and input services
- Denial of service tax credit on specific services
- Interest and penalty imposition
- Limitation aspect in issuing notice for recovery
- Challenge on penalty imposition under Cenvat Credit Rules

Analysis:

Availing Cenvat Credit:
The respondents availed Cenvat credit on various services, including installation, commissioning, infrastructure, maintenance, warranty support charges, and commission towards services. The adjudicating authority held the credit irregular, demanded the amount, imposed interest, and penalty. The Commissioner (Appeals) set aside the order on limitation grounds but upheld it on merits, stating that the respondents were not eligible to avail Cenvat credit on the mentioned services.

Interest and Penalty Imposition:
The revenue challenged the setting aside of interest demanded on the wrong credit availment, citing Rule 14 of Cenvat Credit Rules, 2004. The Tribunal referred to a previous case emphasizing the mandatory recovery of wrongly taken credit with interest. Regarding penalty, it was argued that the penalty is imposable under Rule 15(2) of the Cenvat Credit Rules, 2004, coupled with the intention to evade payment of duty.

Limitation Aspect:
The Commissioner (Appeals) considered the limitation aspect, noting that the demand should be restricted to the normal one-year period unless there is willful misstatement or suppression of facts to evade tax. The Commissioner found that the department noticed the facts only during record verification, not disputing the details in the ER-1 returns or correspondence with the Range Officer. The Tribunal upheld the Commissioner's findings on limitation, as the revenue did not challenge this aspect.

Conclusion:
The Tribunal found the appeal filed by the revenue devoid of merit, upholding the impugned order as correct and legal. The decision was based on the lack of challenge to the findings on the limitation aspect, leading to the rejection of the revenue's appeal. The judgment affirmed the Commissioner (Appeals)'s decision on the limitation issue, thereby supporting the respondents' position on availing Cenvat credit and rejecting the revenue's claims.