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2017 (12) TMI 500 - AT - Central ExciseCenvat credit - Car/Mobile Insurances - Repair and Maintenance Service of Car - Held that - the appellant had availed CENVAT credit of Service Tax paid on various input services which were not eligible after 01.4.2011 being mentioned under the exclusion clause of the amended definition of input service . However I find that prior to 1.4.2011 under various judgments these services were held to be input service and accordingly credit was admissible - Also as soon as it was pointed out by the audit team of the department in Feb. 2012 the appellant paid/reversed the entire amount of credit. Nevertheless since the appellant has availed credit erroneously keeping in view the overall circumstances of the case imposition of penalty of 5, 000/- on the Appellant would. meet the ends of justice - Appeal partly allowed.
Issues involved: Whether interest and penalty are leviable on the appellant for wrong availment of Cenvat Credit of Service Tax paid in respect of certain services for the period April 2011 to March 2012.
Analysis: The appellant had availed CENVAT credit of Service Tax paid on services that were not eligible post 01.4.2011, as per the exclusion clause of the amended definition of 'input service.' However, prior to 1.4.2011, these services were considered as input services based on various judgments. The appellant reversed the entire amount of credit as soon as it was pointed out by the audit team in Feb. 2012. The show cause notice for interest was issued one year later, which was deemed barred by limitation in light of a judgment of the Hon'ble Delhi High Court. There was no evidence of suppression or mis-declaration of facts. The imposition of an equivalent penalty was deemed unwarranted. Considering the circumstances, a penalty of &8377;5,000/- was imposed on the appellant, which was considered to meet the ends of justice. The impugned order was modified to reduce the penalty, and the appeal was partly allowed. This analysis highlights the key points of the judgment, emphasizing the appellant's inadvertent error in availing credit, the subsequent reversal of the credit, the issue of limitation regarding the demand for interest, and the decision to impose a reduced penalty based on the circumstances of the case.
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