2019 (3) TMI 1373 - AT - Central Excise

Utilization of CENVAT Credit of education cess and higher education cess lying in Cenvat credit account - period prior to 01.03.2015 - Held that - The said issue has been examined by this Tribunal in the case of M/s Paras Petrofils Ltd. Vs. Commissioner of C.Ex. & ST. Surat-II 2017 (10) TMI 798 - CESTAT AHMEDABAD and in the case of PSL Ltd. Vs. Commissioner of C.Ex. & Cus. Vishakhapatnam-I 2013 (11) TMI 1023 - CESTAT BANGALORE wherein it has been held that Cenvat credit of education cess and higher education cess erred prior to 01.03.2015 cannot be utilized for payment of duty - demand of duty alonhgwith interest upheld. Penalty - Held that - It was a bona fide mistake of the appellant for utilization of said Cenvat credit after introduction of Notification No. 12/15-CE anti-dated 13.04.2015, the appellant was under an impression that they can utilize Cenvat credit of education cess and higher education cess for payment of duty, therefore, the penalties imposed on the appellant are set aside. Appeal allowed in part.

Summary

Issues:
Utilization of education cess and higher education cess in Cenvat credit account for payment of duty disallowed.

Analysis:
The appellant appealed against orders disallowing the utilization of education cess and higher education cess in their Cenvat credit account for duty payment. The appellant had a balance in the Cenvat credit account for the mentioned cesses during 2014-2015 and 2015-2016, which they used for duty payment. However, during an audit, it was discovered that such utilization was not permissible. Subsequently, duty demand was confirmed, and penalties were imposed. The main issue was whether the appellant could use the Cenvat credit of education cess and higher education cess before 01.03.2015 for duty payment.

The Tribunal referred to previous cases, such as M/s Paras Petrofils Ltd. and PSL Ltd., where it was held that Cenvat credit of education cess and higher education cess prior to 01.03.2015 could not be used for duty payment. Therefore, the Tribunal upheld the demand of duty along with interest against the appellant.

Regarding the penalty issue, the Tribunal noted that the appellant's mistake in utilizing the Cenvat credit after the introduction of Notification No. 12/15-CE dated 13.04.2015 was a bona fide error. The appellant believed they could use the credit for duty payment. Consequently, the penalties imposed on the appellant were set aside.

In conclusion, the Tribunal confirmed the duty demand with interest but dropped the penalty against the appellant. The appeals were disposed of accordingly.