2010 (3) TMI 623 - AT - Service Tax

Cenvat credit on the inputs and input services - on the installation and commissioning, additional infrastructure and maintenance commission, warranty support charges and commission towards installation and commissioning and warranty services treating all these services as input services - credit taken is irregular - interest and imposed equal amount of penalty Held that - credit of service tax paid on the above services was reflected in their ER-1 returns - facts were noticed by the department only on verification of records and that the appellants had availed double benefit by taking credit as well as collecting the amounts from their buyers - adjudicating authority is not correct - appellants have already paid the disputed amount which shows their bona fides. When there is no suppression of fact imposition of penalty under rule 15 of Cenvat Credit Rules, 2004 is not warranted.

Summary

Issues involved:
Revenue appeal against Order-in-Appeal denying Cenvat credit on certain services, interest recovery, penalty imposition, limitation aspect, and correctness of the impugned order.

Analysis:

1. Cenvat Credit Denial:
The issue revolved around the denial of Cenvat credit on various services by the respondents. The adjudicating authority found the credit irregular, leading to the issuance of a show-cause notice. The Order-in-Original confirmed the denial, along with interest and penalty. The Commissioner (Appeals) upheld the Order-in-Original on merits, setting aside the interest demanded by the Original Adjudicating Authority. The Tribunal noted that the respondents were not eligible to avail Cenvat credit on the services in question.

2. Interest Recovery:
The Revenue argued that interest is leviable even if the credit taken has not been utilized, as per Rule 14 of the Cenvat Credit Rules, 2004. Citing a previous Tribunal case, the Revenue contended that interest should be recovered when credit is taken wrongly. The Tribunal found that the impugned order correctly set aside the interest demanded on the wrong credit availment, as there was no challenge to the findings on the aspect of limitation.

3. Penalty Imposition:
The Revenue asserted that penalty is imposable under Rule 15(2) of the Cenvat Credit Rules, 2004, due to the wrongful credit availed by the assessee. The Tribunal agreed that penalty could be imposed in cases where there is suppression with an intent to evade payment of duty, as per Section 11AC of the Central Excise Act, 1944.

4. Limitation Aspect:
The Tribunal examined the limitation aspect under Section 11A of the Central Excise Act, 1944, which requires a notice within one year unless there is wilful misstatement or suppression of facts to evade tax. The Commissioner (Appeals) found that the demand should be restricted to the normal period of one year, as there was no suppression of facts. The Tribunal upheld the Commissioner's findings on limitation, noting that the Revenue did not challenge these findings, indicating their acceptance.

5. Conclusion:
The Tribunal concluded that the appeal filed by the Revenue lacked merit and upheld the impugned order as correct and legal. The decision was based on the findings regarding limitation and the ineligibility of the respondents to avail Cenvat credit on the disputed services.