2014 (2) TMI 353 - AT - Central Excise

Tribunal overturns penalty, allows input service credit on courier & decoration services.

PS AUTO PVT LTD. Versus CCE, MUMBAI-III

PS AUTO PVT LTD. Versus CCE, MUMBAI-III - 2014 (303) E.L.T. 551 (Tri. - Mumbai), 2017 (49) S.T.R. 500 (Tri. - Mumbai) Issues:- Duty demand due to denial of input service credit on outward courier charges and interior decoration charges- Imposition of penalty under Section 11AC for excess availment of abatement- Contesting the penalty imposed under Section 11AC- Contesting the denial of CENVAT credit on outward courier charges and interior decoration chargesAnalysis:Issue 1: Duty Demand on Input Service CreditThe appellant, a manufacturer of Anti-freezing coolants, was found availing excess abatement of 2% during a specific period. The department observed this during an audit and issued a show-cause notice for the duty demand along with interest. The appellant paid the differential duty and interest but contested the denial of CENVAT credit on outward courier charges and interior decoration charges. The appellant argued that there was no willful suppression of fact on their part. The Tribunal found that the appellant had not deliberately acted wrongly, and as there was no clear violation of Section 11AC of the Act, the penalty on the appellant was deemed not imposable.Issue 2: Imposition of Penalty under Section 11ACThe appellant contested the penalty imposed under Section 11AC, citing a Supreme Court observation that Section 11AC does not apply to every case of non-payment or short payment of duty. The Tribunal considered the appellant's argument and found that in the absence of fraud, collusion, willful misstatement, or suppression of facts to evade payment of duty, the penalty was not justified. The Tribunal relied on the decision in the case of Rajasthan Spinning & Weaving Mills to support its conclusion.Issue 3: Contesting Denial of CENVAT CreditThe appellant contested the denial of CENVAT credit on outward courier charges and interior decoration charges. The Revenue argued that the appellant was not entitled to avail CENVAT credit on interior decoration services as it was unclear whether these services were availed at the factory premises. However, the Tribunal noted that the services were indeed availed at the office located within the factory premises, as confirmed by the Commissioner (Appeals). Relying on the decision in the case of Ultra Tech Cement Ltd., the Tribunal allowed the input service credit on outward courier charges and interior decoration services.In conclusion, the Tribunal allowed the appeal, setting aside the penalty and allowing the input service credit on outward courier charges and interior decoration services.