2023 (5) TMI 296 - AT - Central Excise

Appeal success: Interest chargeability dispute resolved under CENVAT Credit Rules.

Franke Faber India Pvt. Ltd. Versus Commissioner of Central GST & Central Excise, Aurangabad

Franke Faber India Pvt. Ltd. Versus Commissioner of Central GST & Central Excise, Aurangabad - TMI Issues involved:The chargeability of interest under rule 14 of CENVAT Credit Rules, 2004 on the finding in order of Commissioner of Central GST & Central Excise (Appeals), Aurangabad.Comprehensive Details:1. Background:The appeal concerned the chargeability of interest under rule 14 of CENVAT Credit Rules, 2004 based on the finding of the Commissioner of Central GST & Central Excise (Appeals), Aurangabad. The appellant, M/s Franke Faber India Pvt Ltd, had procured services from its overseas associate, which was chargeable to tax liability under section 66B of Finance Act, 1994. The dispute arose regarding the eligibility of taking credit upon the discharge of service tax.2. First Appellate Authority's Decision:The first appellate authority remanded the case to the adjudicating authority for re-determination on the facts relating to the completion of contractual payment made to the overseas entity. The de novo proceedings confirmed the liability of recovery of credit along with interest. The impugned order set aside the recovery of credit but demanded interest on the amount based on the case law of Praveen Jain & Co. Pvt. Ltd. vs. Commissioner of S.T. Delhi.3. Appellant's Contention:The appellant contended that with the demand set aside, there should be no scope for charging interest. They relied on rule 14 of CENVAT Credit Rules, 2004 and the nature of interest as elaborated by the Hon'ble Supreme Court in Prathiba Processors vs Union of India.4. Authorized Representative's Submission:The Authorized Representative argued that the date on which the credit was availed did not match the date of the invoice without factual evidence of the latter.5. Interpretation of CENVAT Credit Rules:It was argued that interest liability arises only upon wrongly taking and utilizing credit under rule 14 of CENVAT Credit Rules, 2004. Rules 3 and 4 of the same make it clear that credit should be taken upon receipt of the invoice for the service procured.6. Tax Liability and Credit Availability:In this case, tax liability arose by deeming the recipient of the service to be the provider. Credit would be available from the date of discharging the tax liability, irrespective of immediate payment to the actual service provider.7. Judicial Review of Impugned Order:It was noted that the impugned order based its outcome on an order that had already been set aside during the first round of litigation. The order was criticized for relying on non-existent material to confirm the leviability of interest.8. Final Decision:The impugned order was set aside, and the appeal was allowed, emphasizing that with the original authority exceeding the show cause notice's scope, the first appellate authority should have been bound by that finding.*(Separate Judgement not mentioned, hence no highlight)*