2017 (10) TMI 396 - AT - Central Excise

Tribunal disallows Cenvat Credit for missing registration numbers, emphasizes due diligence. Penalty reduced.

Lombardini India Pvt. Ltd. Versus Commissioner of Central Excise, Aurangabad

The tribunal disallowed Cenvat Credit to M/s. Lombardini India Pvt. Ltd. for documents lacking service tax registration numbers, indicating non-payment of ... CENVAT credit - duty paying documents - appellant had availed Cenvat Credit on certain documents wherein there was no service tax registration number of the service provider mentioned or where wrong service tax registration number was mentioned - Held that: - the Cenvat Credit documents have an important role and responsibility is cast on the personal availing Cenvat Credit to ensure that the person providing the service really exist and has paid the duty to the exchequer - In the instant case, absence of service tax registration number clearly indicate that service tax has not been paid to the Government. Failure to perform due diligence on the part of the appellant is apparent - the credit of Cenvat Credit on these documents cannot be allowed. Penalty - Held that: - penalty under Rule 15 of the Cenvat Credit Rules equal to the demand of Cenvat Credit has been imposed - the said penalty is harsh - penalty reduced to ₹ 1,50,000/-. Appeal allowed in part. Issues: Denial of Cenvat Credit on certain documents and imposition of penalty.Denial of Cenvat Credit:The appeal was filed against the denial of Cenvat Credit by M/s. Lombardini India Pvt. Ltd. The appellant argued that they had availed the credit on certain documents where the service tax registration number of the service provider was either missing or incorrect. The appellant claimed that the receipt of services and payment of service tax to the service provider were not disputed. However, the appellant failed to provide any evidence to support their claim. The tribunal noted that the absence of the service tax registration number on the documents indicated non-payment of service tax to the government. It was emphasized that due diligence is essential before availing Cenvat Credit to ensure the legitimacy of the service provider. As the appellant did not perform due diligence, the credit on those documents was disallowed.Imposition of Penalty:The tribunal observed that the appellant had claimed to have reversed the Cenvat Credit without utilizing it, but no evidence was presented to support this assertion. Consequently, the claim was rejected due to lack of evidence. A penalty equal to the demand of Cenvat Credit was imposed under Rule 15 of the Cenvat Credit Rules. The tribunal deemed the penalty to be harsh and reduced it to Rs. 1,50,000. The appeal was partly allowed on these terms. The judgment was pronounced in court on 1/9/17.