2016 (12) TMI 578 - AT - Central Excise

CENVAT credit - Levy of penalty - reversal of credit with interest before issuance of SCN - input services - repair and maintenance service of their motor vehicles - forged invoices - Held that - the entire demand in the show-cause notice is hit by limitation because there is no suppression of fact or fraud alleged in the show-cause notice. He further submitted that the appellant deposited CENVAT credit along with interest even before the issue of show-cause notice, therefore, the respondent should not have issued the show-cause notice. Forged invoices - I find that the impugned order is not sustainable in law with regard to disallowing the CENVAT credit of ₹ 1,490/- on the ground that on invoices the address of Head Office is mentioned. This is also not a very valid objection for denying the CENVAT credit more so when the defect has also been cured by the appellant. The penalty under Section 11AC also not justified. Therefore, I set aside the impugned order with consequential relief - appeal allowed - decided in favor of assessee.

Issues:
1. Availment of CENVAT credit on repair and maintenance services of motor vehicles.
2. Availment of CENVAT credit on invoices not pertaining to the appellant.
3. Denial of CENVAT credit under Rule 14 of CCR.
4. Allegations of suppression of fact or fraud in the show-cause notice.
5. Disallowance of CENVAT credit of ?1,490.
6. Applicability of penalty under Section 11AC.

Analysis:

1. The appellant, a manufacturer of excisable goods, availed CENVAT credit on repair and maintenance services of their motor vehicles. The Department alleged that these services did not meet the conditions specified in the CENVAT Credit Rules. A show-cause notice was issued for recovery and appropriation of the availed credit, along with interest and penalties. The Assistant Commissioner confirmed the demand, imposed penalties, and denied credit under Rule 14 of CCR. The Commissioner (A) upheld this decision, leading to the present appeal.

2. The appellant also availed CENVAT credit on invoices not specifically meant for them, as they were addressed to their Head Office and other branches. Some invoices lacked the service tax registration number of the service provider, rendering them improper documents for credit availing. The appellant argued that they were entitled to credit even if the invoices were in the name of the Head Office, as the defects had been rectified.

3. The appellant contended that the entire demand in the show-cause notice was time-barred due to the absence of alleged suppression of fact or fraud. They emphasized that they had deposited the CENVAT credit with interest before the notice issuance, questioning the necessity for the notice.

4. In the absence of any intention to evade duty, the Tribunal referred to precedents where penalties under Section 11AC were not imposed. The Tribunal highlighted instances where genuine mistakes in availing CENVAT credit did not warrant penalties, especially when rectified promptly.

5. Regarding the disallowance of CENVAT credit amounting to ?1,490 due to the mention of the Head Office's address on invoices, the Tribunal found this objection insufficient, especially since the appellant had rectified the issue. Citing relevant judgments, the Tribunal concluded that the penalty under Section 11AC was unwarranted and set aside the impugned order.

6. The Tribunal ruled in favor of the appellant, setting aside the impugned order and providing consequential relief, if any. The judgment emphasized the importance of rectifying errors in availing CENVAT credit and highlighted the need for proper documentation to support credit claims.

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