2018 (9) TMI 1116 - AT - Central Excise

Demand of Interest and penalty - wrongly availed credit reversed on being pointed out - whether the interest and penalties confirmed are sustainable or not? Held that - It is seen that the appellant has not furnished necessary documents to establish that at the time of availing the credit, they had sufficient credit balance. The learned Counsel for appellant has prayed for a further chance to furnish the necessary documents - it is fit to remand the matter to the adjudicating authority so as to provide the appellant a further opportunity to produce the relevant documents - appeal allowed by way of remand.

Summary

Issues: Availing Cenvat Credit on ineligible services, demand of interest and penalties, sufficiency of credit balance at the time of availing credit.

Analysis:

The judgment revolves around the issue of availing Cenvat Credit on ineligible services by the appellants, leading to a demand for interest and penalties. The appellants, engaged in the manufacture of Crushing Machines and Screening Machines, had mistakenly availed credit on canteen services and service tax paid on rental at certain offices. Upon verification, it was discovered that the credit availed was not eligible. Although the appellants promptly reversed the credit upon notification, a Show Cause Notice was issued, resulting in the confirmation of interest demand and penalty by the Original Authority and the Commissioner (Appeals).

During the appeal, the appellant's counsel argued that the credit reversal was immediate upon identification of the error, emphasizing the absence of any intention to evade duty payment. The authorities, however, maintained their stance, contending that the necessary documents proving credit reversal before utilization were not provided during the period of credit availment. The appellant submitted documents indicating the credit reversal and a sufficient credit balance at the time, which were disregarded by the lower authorities. The appellant requested an additional opportunity to furnish further evidence supporting their claim.

After hearing both sides, the Tribunal deliberated on the sustainability of the confirmed interest and penalties. Observing the lack of documentation establishing the credit balance at the time of availing credit, the Tribunal deemed it appropriate to remand the matter to the adjudicating authority. This remand would allow the appellant the chance to present the required documents for reconsideration. Additionally, the Tribunal emphasized the applicability of a specific decision by the Hon'ble jurisdictional High Court, highlighting the importance of considering this precedent in the fresh evaluation of the case.

Ultimately, the appeal was allowed through remand, signifying a pivotal decision to provide the appellant with an opportunity to furnish essential documents and have the issue reevaluated based on the presented evidence and relevant legal precedents.