2018 (9) TMI 899 - AT - Central Excise

Tribunal rules in favor of appellants, exempting them from interest and penalties on Construction Services credit post 01.04.2011.

The Tribunal held that the appellants were not liable to pay interest and penalties for availing credit on Construction Services after 01.04.2011. Citing ... Demand of Interest and penalties - CENVAT Credit on Construction Services for the period from October, 2011 to July, 2012 - Department was of the view that the said credit is not eligible as per the amended definition of input services with effect from 01.04.2011 - whether the appellants are liable to pay the interest and the penalties imposed on the ground that they had availed credit on Construction Services after 01.04.2011? Held that:- It is not disputed that the appellants had reversed the credit immediately on being pointed out - In the case of Strategic Engineering (P) Ltd. [2014 (11) TMI 89 - MADRAS HIGH COURT], the Hon’ble jurisdictional High Court has held that no interest and penalty can be levied when the wrongly availed credit has been reversed before utilization. Demand of interest and penalties set aside - appeal allowed - decided in favor of appellant. Issues:Whether the appellants are liable to pay interest and penalties for availing credit on Construction Services after 01.04.2011.Analysis:The appellants availed credit on Construction Services from October 2011 to July 2012, which the Department deemed ineligible post an amendment in the definition of input services from 01.04.2011. Despite reversing the credit before utilization, the Department issued a Show Cause Notice for interest and penalties. The Original Authority confirmed the demand, interest, and penalties, a decision upheld by the Commissioner (Appeals), leading the appellant to appeal before the Tribunal.The appellant's Counsel argued that the credit on Construction Services was inadvertently availed, acknowledging its ineligibility post 01.04.2011. The Counsel contended that reversing the credit before utilization amounted to non-availment, citing relevant legal precedents in support of this argument. The AR supported the findings in the impugned order.After hearing both sides, the Tribunal focused on the crucial issue of whether the appellants were liable for interest and penalties due to availing credit on Construction Services post the specified date. Noting that the appellants promptly reversed the credit upon notification, the Tribunal referenced the decision in Strategic Engineering (P) Ltd., where the High Court ruled against levying interest and penalties if wrongly availed credit is reversed before utilization. Consequently, the Tribunal concluded that the impugned order could not be sustained and was set aside, thereby allowing the appeal with any consequential reliefs.In the absence of any dissenting opinions or separate judgments delivered by the judges, the decision was unanimous and pronounced in open court.