Tribunal overturns denial of Cenvat Credit, extended period invocation, and penalty imposition.

The Tribunal allowed the appeal, setting aside the denial of Cenvat Credit on input services, invocation of the extended period under Section 11-A(4), and imposition of penalty. The Tribunal found that the appellant had complied by reversing the credit and paying interest before the show cause notice was issued, and the penalty was not applicable as there was no intentional duty evasion.

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Issues Involved:
1. Denial of Cenvat Credit on input services.
2. Invocation of the extended period under Section 11-A(4) of the Central Excise Act, 1944.
3. Imposition of interest and penalty under Rule 15 of the CENVAT Credit Rules, 2004 read with Section 11-AC of the Central Excise Act, 1944.

Summary of Judgment:

1. Denial of Cenvat Credit on Input Services:
The appellant availed Cenvat Credit on input services like Insurance Services (Vehicle Insurance & Life Insurance) and Civil Work amounting to Rs. 67,022/- for the period from April 2010 to October 2012. The Revenue contended that these services were not admissible for Cenvat Credit. The Commissioner (Appeals) upheld the Order-in-Original, which confirmed the demand for Rs. 67,022/- and imposed a penalty of an equivalent amount. The definition of 'input service' under Rule 2(l) of the Cenvat Credit Rules, 2004, as amended from 01.04.2011, excluded services related to construction and personal use such as life insurance.

2. Invocation of the Extended Period under Section 11-A(4):
The show cause notice was issued on 14.07.2015, invoking the extended period under Section 11-A(4) of the Central Excise Act, 1944, on the grounds that the appellant did not submit CENVAT Credit returns as required. The Tribunal found no valid grounds for invoking the extended period, noting that the appellant had reversed the credit and paid the interest before the issuance of the show cause notice. The Tribunal observed that the show cause notice should not have been issued as the appellant was in constant communication with the department.

3. Imposition of Interest and Penalty:
Interest and penalty were imposed under Rule 15 of the CENVAT Credit Rules, 2004 read with Section 11-AC of the Central Excise Act, 1944. The Tribunal, referencing the Supreme Court's judgment in Rajasthan Spinning and Weaving Mills, held that penalty under Section 11AC is applicable only in cases of intentional evasion of duty. Since the extended period was not justifiably invoked, the penalty was set aside. The Tribunal emphasized that the appellant's reversal of credit and payment of interest should have precluded the issuance of the show cause notice.

Conclusion:
The Tribunal allowed the appeal, setting aside the impugned order on the grounds that the denial of Cenvat Credit, invocation of the extended period, and imposition of penalty were not justified. The operative part of the order was pronounced in open court.

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