2018 (11) TMI 896 - AT - Central Excise

CENVAT Credit - capital goods - MH Sheet Metal Components (Rail) - Held that - The demand of cenvat credit of ₹ 42,580/- on the goods used for repair of capital goods is already dropped - demand withheld. Penalty - CENVAT Credit on vehicle insurance premium and health insurance premium already dropped - Held that - Law is settled that the allegations as that of suppression with a malafide mensrea of tax evasion are of grave nature and cannot be confirmed unless and until there is a cogent evidence to that respect. For imposition of penalty, it has to be proved by the Department that the assesse acted deliberately in defiance of law and was guilty of conduct concumacious or dishonest or acted in conscious disregard of its obligation - penal proceedings dropped. CENVAT Credit - input service - Works Contract Service - Held that - The demand of Credit of service tax paid on Work Contract Service has already been dropped - demand withheld. Short payment of Central Excise Duty - price escalation bills raised - Held that - Since the duty is payable on price escalation and the appellant could not have produced any document proving that the railway authorities had finalised the amount of those 13 bills at an amount of ₹ 55,22,821/-, it is held that the order under challenge has rightly confirmed the said demand. Apparently, the appellant has failed to prove that the Bills on which amount has been calculated were merely the proposal amount - As there are no two set of bills on record, it is held that demand has rightly been confirmed under this Head. Short payment of Central Excise duty - extra considerations under the guise of freight - Held that - The freight expenses incurred for the purpose by the appellant are to be reimbursed by the railways at agreed upon rate. In the given circumstances, the assessee premises becomes the place of removal. It is held that the element of freight is not to be included in the normal value of the goods - demand withheld. Demand of Interest - Held that - Though the appellant has taken the plea that the interest amount has been paid and has not been reversed. The said fact for want of any evidence on record required verification from the Adjudicating Authority below. For this limited purpose, matter is hereby remanded back. Appeal allowed in part and part matter on remand.

Summary

Issues:
1. Wrongly availed cenvat credit under capital goods account.
2. Irregularly availed cenvat credit on vehicle insurance premium, health insurance premium, and construction services.
3. Irregularly availed cenvat credit on work contract service.
4. Short payment of central excise duty on price escalation bills.

Analysis:

1. The appellants were found to have wrongly availed cenvat credit under the capital goods account for certain items not covered under the definition of capital goods as per Cenvat Credit Rules, 2004. The appellate tribunal upheld the dropping of this demand as the Department did not challenge it further. The order under challenge confirmed this decision.

2. Regarding the irregularly availed cenvat credit on vehicle insurance premium, health insurance premium, and construction services, the appellants had already reversed these credits before the issuance of the show cause notice. The tribunal found that penalties could not be imposed in this scenario, as there was no evidence of deliberate evasion. The penalties were dropped, and the order under challenge was upheld in this regard.

3. The irregularly availed cenvat credit on work contract service was also a point of contention. The tribunal upheld the dropping of this demand as per the order under challenge, as there was no appeal from the Department. The penalties related to this were also set aside based on the lack of evidence of deliberate tax evasion.

4. The issue of short payment of central excise duty on price escalation bills was thoroughly examined. The tribunal found that the demand was rightly confirmed as the appellant failed to prove that the bills in question were mere proposals. The tribunal upheld the confirmation of this demand as per the order under challenge.

5. Additionally, the imposition of interest and its confirmation required further verification as the appellant claimed to have paid the interest amount. The matter was remanded back for verification by the Adjudicating Authority. The tribunal partly allowed the appeal, upholding most findings of the order under challenge except for the imposition of penalties.

In conclusion, the appellate tribunal addressed each issue comprehensively, considering the relevant legal provisions and evidence presented by both parties, ultimately making decisions based on the merits of each case.