Tribunal allows appeal on CENVAT credit disallowance for input services, waives penalty.

The Tribunal allowed the appeal filed by M/s Terai Foods Pvt Ltd, overturning the disallowance of CENVAT credit on input services. The Tribunal held that the appellant was entitled to the credit, considering the retail outlet as the "place of removal." Additionally, the penalty imposed for wrong credit availment and short payment of duty was waived as the appellant promptly paid the amounts without intent to evade payment, in accordance with the Central Excise Act. The duty demand, interest, and penalties were set aside.

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Issues:
Disallowance of CENVAT credit on input services; Imposition of penalty for wrong availment of credit and short payment of duty.

Analysis:
The appeal was filed against the disallowance of CENVAT credit on input services by M/s Terai Foods Pvt Ltd. The appellant, a manufacturer of bakery items, transferred goods to a retail outlet and availed credit on rental charges for the outlet. The central excise department denied the credit, imposed interest, and penalties. The appellant contended that they were eligible for the credit as the retail outlet was the "place of removal" under the Central Excise Act. The department disagreed, leading to a dispute.

The Tribunal referred to a similar case where credit for service tax on rent for retail outlets was allowed, considering them as "place of removal." Following this precedent, the Tribunal held that the appellant was entitled to the credit of input services, overturning the department's decision.

Regarding the penalty imposed for wrong credit availment and short payment of duty, the appellant had paid the amounts with interest upon departmental notification without disputing. The appellant sought a waiver of the penalty, citing a case supporting their plea. The Tribunal noted that the appellant had paid the duty promptly and had no intent to evade payment. Relying on the Central Excise Act, the Tribunal granted a waiver of penalty, setting aside the duty demand, interest, and penalties imposed.

In conclusion, the Tribunal allowed the appeal, setting aside the duty demand, interest, and penalties, as the credit was deemed legally eligible. The penalty was waived based on the absence of fraud or suppression, in line with the provisions of the Central Excise Act.

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