2017 (12) TMI 1082 - AT - Central Excise

Tribunal grants appellant's appeal on Cenvat credit issues, dismisses revenue's appeal, and awards consequential benefits.

The Tribunal allowed the appellant's appeal concerning the availment of Cenvat credit on Capital Goods Electric Generating Set, non-reversal of Cenvat ... Admissibility of Cenvat credit on capital goods - exclusion from credit under Rule 9(1)(b) of the Cenvat Credit Rules - retrospective effect of amendment to Rule 14 of the Cenvat Credit Rules - liability to pay interest on subsequently reversed Cenvat credit where credit was not utilizedLiability to pay interest on subsequently reversed Cenvat credit where credit was not utilized - retrospective effect of amendment to Rule 14 of the Cenvat Credit Rules - No interest was payable where Cenvat credit reversed prior to issuance of show cause notice and the assessee had not utilized the credit. - HELD THAT: - The Tribunal found on admitted facts that the assessee had sufficient balance in the Cenvat register and the impugned credit entries were reversed on being objected by audit. By Notification No.18/2012-CE(NT) dated 17.03.2012 the words in Rule 14 were amended so that interest is not chargeable where credit, though taken, has not been utilized. The Tribunal held that the amended Rule 14 has retrospective effect for the period in dispute (2011-12 and 2012-13) and, given the admitted non-utilization of the credit, no interest liability arose. The Tribunal relied on the factual admission of non-use and the amendment to Rule 14 to reject the demand for interest. [Paras 7]Demand of interest on the reversed Cenvat credit is not sustainable; no interest payable.Admissibility of Cenvat credit on capital goods - exclusion from credit under Rule 9(1)(b) of the Cenvat Credit Rules - Cenvat credit claimed on Electric Generating Set by reliance on a supplementary invoice was admissible and not hit by the exclusion in Rule 9(1)(b). - HELD THAT: - The Commissioner had examined whether allegations of suppression or wilful misstatement existed so as to attract Rule 9(1)(b). The record did not show any demand for non-levy or short-levy based on fraud, collusion, wilful misstatement or suppression for the period in question, and earlier suppression charges against the supplier had been dropped by the Tribunal. The Commissioner accordingly found that the exclusion in Rule 9(1)(b) did not apply. Further, the goods were received in the factory and duty was paid; the claim complied with Rule 4's phased availment of credit for capital goods. On these bases the impugned credit on the strength of the supplementary invoice was held admissible. The Tribunal noted that the issue had been settled by the Ahmadabad Bench decision relied upon and that there was no stay by the High Court. [Paras 5, 8]Credit on the Electric Generating Set is allowable; the revenue's appeal on this point is dismissed.Final Conclusion: The assessee's appeal is allowed in part: interest demand on reversed Cenvat credit (periods 2011-12 and 2012-13) is set aside as not payable; the Cenvat credit on the Electric Generating Set is held admissible and the revenue's appeal dismissed; penalties imposed in the impugned order are set aside and consequential benefits granted to the assessee. Issues:1. Availment of Cenvat credit on Capital Goods Electric Generating Set2. Non-reversal of proportionate Cenvat credit on account of exempted services3. Inadmissible Cenvat credit on services received in relation to exportIssue 1: Availment of Cenvat credit on Capital Goods Electric Generating SetThe appellant availed Cenvat credit on Capital Goods Electric Generating Set without payment of duty and without registration. The issue was settled, and both parties agreed. The Tribunal found no merit in the revenue's appeal, as there was no stay granted by the Hon'ble Gujarat High Court against the Tribunal's order. The appeal filed by the assessee was allowed, and the revenue's appeal was dismissed. Penalties imposed were set aside, and consequential benefits were granted.Issue 2: Non-reversal of proportionate Cenvat credit on account of exempted servicesThe issue revolved around the non-reversal of Cenvat credit on exempted services. The appellant argued that the credit was reversed more than 18 months before the issue of the show cause notice, rendering the notice invalid. Additionally, the appellant claimed that since they had sufficient Cenvat credit balance and did not utilize the reversed amount, no interest liability arose. The Tribunal held that under the amended Rule 14 of CCR, 2014, no interest is chargeable upon subsequent credit reversal if the credit was not utilized. Consequently, the appellant was not liable to pay interest. The revenue's appeal was based on the Tribunal's order in another case, but the Tribunal found no merit in their argument.Issue 3: Inadmissible Cenvat credit on services received in relation to exportThe issue of inadmissible Cenvat credit on services related to export was resolved, with both parties agreeing. The Tribunal upheld the admissibility of the Cenvat credit based on the Supplementary Invoice, as the supplier faced no charges of suppression. The Tribunal ruled in favor of the appellant, stating that the credit was permissible under the Cenvat Credit Rules. The revenue's appeal was dismissed, and the penalties imposed were set aside.In conclusion, the Tribunal's judgment addressed the issues of Cenvat credit availment on Capital Goods Electric Generating Set, non-reversal of Cenvat credit on exempted services, and inadmissible Cenvat credit on services related to export. The Tribunal allowed the appellant's appeal, dismissed the revenue's appeal, and set aside imposed penalties, providing consequential benefits to the assessee in accordance with the law.