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TMI Blog2018 (6) TMI 43X X X X Extracts X X X X X X X X Extracts X X X X ..... against appellant. - CEA No. 38 of 2016 (O&M) - - - Dated:- 15-5-2018 - MR. AJAY KUMAR MITTAL AND MR. TEJINDER SINGH DHINDSA, JJ. Mr. Amit Goyal, Advocate, Senior Standing Counsel for the appellant-revenue Mr. Amrinder Singh, Advocate for the respondent ORDER Ajay Kumar Mittal, (ACJ). 1. This appeal has been preferred by the appellant-revenue under Section 35G of the Central Excise Act, 1944 (in short, the Act ) against the impugned order dated 07.10.2015, Annexure A-3, passed by the Customs, Excise Service Tax Appellate Tribunal, New Delhi (in short, the Tribunal ) in Appeal No. E/2181/2008-EX (DB), claiming following substantial questions of law:- ( i) Whether the Tribunal is justified in hol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Credit Rules, 2004 (in short, the Rules ), the Cenvat credit shall not be allowed on such quantity of inputs or input service which is used in the manufacture of exempted goods or exempted services. On being pointed out by the Department on 09.08.2007, the respondent reversed the service tax credit of ₹ 65,21,123/- under protest on 16.10.2007 on the proportional basis of clearance value of dutiable goods and exempted goods. The respondent during the period from January 2007 to March 2007 availed the Cenvat credit of ₹ 64,60,537/- of service tax paid on input service which was used in the manufacture of exempted goods in contravention of the provisions of Rule 6(1) of the Rules and the same was recoverable under Rule 14 of the R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the credit amount of ₹ 65,21,123/- pertaining to the period from January 2007 to March 2007 under protest on 16.10.2007. A show cause notice was issued to the respondent on 24.01.2008. The demand of inadmissible credit of ₹ 64,60,537/- alongwith interest, and penalty was confirmed. At the time of hearing before the Tribunal, learned counsel for the respondent confined his argument with regard to the demand of interest and imposition of penalty. According to the respondent, the credit had been reversed prior to utilisation and therefore such reversal would amount to not taking credit. Therefore, the demand of interest was unsustainable. After considering the relevant case law on the point, the Tribunal held the demand of inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld not attract liability of interest. Similar view has been taken in the other judgments cited and placed before us. Following the principle laid in these judgments, we hold that as the credit has been reversed before utilization, the demand of interest is unsustainable. 7. Next question to be considered is imposition of penalty. Interestingly, it is stated in the show cause notice that the same is issued invoking the extended period of limitation. As per records, the department has come to know about wrongful availment of credit and informed the appellants the same on 09.08.2007. The show cause notice is dated 24.01.2008 for which in our view is within the period of limitation. We do not find any ground necessary for invoking the ex ..... X X X X Extracts X X X X X X X X Extracts X X X X
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