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2018 (12) TMI 853 - AT - Central ExciseDemand of Interest - Distribution of credit of service tax paid - reverse charge mechanism - input service distribution - Rule 7A of the Cenvat Credit Rules - Held that - The appellant had taken credit but not utilized the same and reversed the same prior to the issuance of the show cause notice. The Adjudicating Authority following the Board s Circular dated 03.09.2009 observed that interest is payable even when credit has not been utilized. Larger Bench of the Tribunal in the case of J.K.Tyre & Industries Ltd. v. Asst. Commr. of C.Ex., Mysore 2016 (11) TMI 911 - CESTAT BANGALORE held that wrong availment of Cenvat Credit, interest is not payable, if reversed before utilization - the demand of interest on unutilised Cenvat Credit, cannot be sustained - penalty sustained as was imposed for contravention of the Rules. CENVAT Credit - GTA Services - Held that - The issue is no more resintegra in view of the recent decision of the Hon ble Supreme Court in the case of Commissioner of Central Excise, Belgaum vs. Vasavadatta Cements Ltd. 2018 (3) TMI 993 - SUPREME COURT , where it was held that It has to be from the place of removal upto a certain point. Therefore, tax paid on the transportation of the final product from the place of removal upto the first point, whether it is depot or the customer, has to be allowed. The demand of cenvat credit is set aside - The demand of interest is also set aside - penalty imposed under Rule 15(3) of the Cenvat Credit Rules, 2004 is upheld. Appeal allowed in part.
Issues:
Denial of Cenvat credit on ISD invoices due to technical infractions and incomplete details. Dispute over liability for service tax payment on GTA services. Validity of reversing Cenvat credit before utilization and imposition of interest. Analysis: Issue 1: Denial of Cenvat credit on ISD invoices The case involved the appellant distributing credit through ISD invoices to its Durgapur plant, totaling &8377;1,16,63,635 for GTA services. The show cause notice alleged incomplete ISD invoices and violation of Cenvat Credit Rules. The Commissioner upheld the notice, emphasizing the factory's responsibility for tax payment on GTA services. The appellant argued that the ISD concept was misunderstood, and technical infractions in the invoices should not deny substantive benefits. The Tribunal referred to previous judgments supporting the appellant's position. The order set aside the demand for Cenvat credit, citing the Supreme Court's decision in a related matter. Issue 2: Liability for service tax on GTA services The appellant contended that the corporate office, registered as an ISD, was liable for service tax on GTA services, covering both inward and outward transportation. The Tribunal agreed, referencing the reverse charge provisions and the definition of input service. The order overturned the demand for Cenvat credit on GTA services, aligning with the Supreme Court's interpretation. Issue 3: Reversal of Cenvat credit and interest imposition The Adjudicating Authority proposed interest payment despite the appellant reversing the unutilized credit before notice issuance. The Tribunal referred to precedents stating that interest is not payable if credit is reversed before utilization. Citing relevant case law, the order set aside the interest demand but upheld the penalty for contravention of rules. The judgment emphasized that no intention to evade duty was evident, leading to the penalty not being levied. In conclusion, the Tribunal's order modified the impugned decision, setting aside the demand for Cenvat credit on GTA services, interest on unutilized credit, and upholding the penalty. The judgment provided a detailed analysis of each issue, relying on legal interpretations and precedents to support its conclusions, ensuring a fair and thorough assessment of the case.
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