2018 (8) TMI 12 - AT - Central Excise

Appellate tribunal affirms disallowed CENVAT credit, penalties for erroneous claims, emphasizes factual verification.

The appellate tribunal upheld the lower authority's decision to disallow CENVAT credit, impose interest, and penalties on the appellant for erroneous ... CENVAT Credit - credit taken on the basis of documents which are not in their name but in the name of their CHA - credit of the entire amount of freight taken but service tax not paid on insurance amounts. Credit taken on documents issued in the name of CHA - Held that:- It is required to be examined whether the invoices raised in the name of their CHA were actually related to the services rendered for the appellant - matter requires reconsideration. Credit on tax paid on insurance amount - Held that:- There are no invoices to decide whether or not these are related to the provision of inward transportation of their inputs - matter required reconsideration. Appeal allowed by way of remand. Issues Involved:1. Incorrect availing of CENVAT credit on certain grounds.2. Disallowance of credit, demand of interest, and imposition of penalties.3. Contention regarding eligibility of credit and penalty imposition.4. Interpretation of invoices in the name of Custom House Agents (CHA).5. Verification of insurance service tax credit eligibility.6. Consideration of interest and penalty imposition criteria.7. Remand decision for further verification and redetermination.Analysis:1. The appellant, a manufacturer of various products, including Plywood and Liquid Resins, availed CENVAT credit erroneously, as highlighted during an audit. The issues raised included availing credit on invoices not in their name, crediting entire freight amount instead of service tax, and claiming credit on insurance tax amounts.2. The lower authorities confirmed the demands to disallow credit, imposed interest, and penalties under CENVAT Credit Rules for contravention. The appellant contested the decisions, arguing that corrections were made promptly upon audit revelation, and the penalties were unjustified. The appellate authority upheld the lower authority's decision, leading to the current appeal.3. The appellant argued that despite reversing the credit upon audit discovery, the lower authorities still imposed penalties. The appellant presented invoices and contended that the errors were not intentional but due to oversight. The Departmental Representative cited precedents to support penalty imposition.4. The tribunal acknowledged the appellant's acknowledgment of the freight credit error but required further verification regarding invoices issued in the name of CHA. The tribunal also sought clarification on the insurance service tax credit eligibility, emphasizing the need for factual verification of documents to determine the relation to inward transportation of inputs.5. The tribunal highlighted the necessity to ascertain the actual relation of CHA invoices to services rendered for the appellant and the relevance of insurance services to inward input transportation. It emphasized that interest and penalties could be imposed if credit contraventions were intentional to evade duty payment.6. The tribunal referred to precedents to support the imposition of penalties even if credits were reversed post-audit. Consequently, the tribunal remanded the case to the original authority for detailed verification and redetermination of any ineligible CENVAT credit, impacting interest and penalty amounts.7. The appeal was allowed for remand to the original authority for further scrutiny and decision based on the issues highlighted, aiming for a fair and accurate determination of CENVAT credit eligibility and penalty imposition.