2017 (10) TMI 193 - AT - Central Excise

CENVAT credit - input services - they started paying duty after availing SSI exemption - Held that - appellant had produced the duty paying document before the first appellate authority, is eligible to avail the CENVAT credit of the tax paid by such input service providers, in accordance with the law - CENVAT credit has been set aside - penalty upheld - appeal allowed in part.

Summary

Issues:
Eligibility to avail CENVAT credit of various input services under Notification No. 08/2003-CE and the penalty imposed under Rule 15 of CENVAT Credit Rules, 2004.

Eligibility to Avail CENVAT Credit of Input Services:
The appeal revolved around the eligibility of a small scale industry to avail CENVAT credit of various input services. The appellant claimed the benefit under Notification No. 08/2003-CE and regularly availed the SSI exemption. The issue arose when the service tax paid by service providers was denied as CENVAT credit by the adjudicating authority due to the SSI exemption conditions. The first appellate authority initially held in favor of the appellant regarding CENVAT credit but rejected the claim for lack of documents showing duty discharge by service providers. The Tribunal remitted the matter back to the first appellate authority for verification of documents. The first appellate authority, however, denied the CENVAT credit again, prompting the appellant to appeal. The final judgment concluded that the first appellate authority exceeded the Tribunal's direction by denying the CENVAT credit, and the appellant, having produced duty paying documents, was eligible to avail the credit in accordance with the law.

Penalty Imposed under Rule 15 of CENVAT Credit Rules, 2004:
Another issue raised was the penalty of ?30,927 imposed under Rule 15 of CENVAT Credit Rules, 2004 in relation to MS channels. The appellant argued that the credit had been reversed with interest, thus requesting the penalty to be set aside. The judgment upheld the penalty only for the issue of ineligible CENVAT credit on MS beams and angles, while setting aside other penalties and demands with interest. Consequently, the penalty of ?30,927 was upheld, and the appeal was disposed of with this decision.

In conclusion, the judgment addressed the eligibility of a small scale industry to avail CENVAT credit of input services under specific notifications and the penalty imposed under CENVAT Credit Rules, 2004. It highlighted the importance of producing necessary documents to support claims and emphasized adherence to legal provisions for availing such credits. The decision provided clarity on the issues raised and balanced the imposition of penalties based on the circumstances of the case.