2023 (9) TMI 711 - AT - Central Excise

Tribunal allows appeal on Cenvat credit utilization, annuls penalty.

The Tribunal allowed the appeal, annulling the demand and penalty imposed on the appellant for utilizing Cenvat credit of Education Cess and Secondary and ... Utilization of Cenvat credit in respect of Education-cess and Higher Education-cess - N/N. 12/2015-CE(NT) dated 30.04.2015 - HELD THAT:- Nothing has been bought on record whereby Central Government has in exercise of this power made any such rules whereby the accumulated-unutilized credit of Education Cess or Secondary and Higher Education Cess with the appellant could have lapsed on the on 01.03.2015 i.e. when these cesses were subsumed in excise duty, or they could not have been utilized for the payment of any kind of duty. In absence of any such notification or legal provision for which necessary power existed in the Central Excise Act, 1944, the utilization of the credit by the appellant towards payment of duty cannot be faulted with. The decision of this Tribunal in the case of M/S PUSHPIT STEELS PVT LTD VERSUS COMMISSIONER OF CENTRAL TAX –TIRUPATI-GST [2019 (6) TMI 322 - CESTAT HYDERABAD] relied upon by the revenue do not take into account any of the above mentioned observations either from the Hon’ble Finance Minister’s speech or the provisions of CGST Act. Accordingly, the said decision cannot be a bounding decision for deciding the present issue. Further the said decision does not say that there is bar in cross utilization of the credit for the period after 30.04.2015, it holds that credit could have been cross utilized after issuance of Notification No 12/2015-CE (NT) dated 30.04.2015, stating that the notification is prospective. Therefore the said decision in any case does not support the case of revenue. There are no merits in the impugned order and the same is set aside - appeal allowed. Issues Involved:1. Utilization of Cenvat Credit of Education Cess and Secondary and Higher Education Cess (EC and SHEC) post 01.03.2015.2. Demand and recovery of Cenvat Credit utilized.3. Imposition of interest and penalty on the appellant.Issue 1: Utilization of Cenvat Credit of EC and SHEC post 01.03.2015The appellant utilized Cenvat credit of EC and SHEC amounting to Rs. 13,05,381/- lying in balance as on 01.03.2015 towards payment of Central Excise duty for May to July 2015. The Commissioner (Appeals) held that the utilization of such credit for payment of Central Excise duty post 01.03.2015 was not in terms of the provisions of the Rules. The appellant contended that Notification No. 12/2015-CE(NT) dated 30.04.2015 allowed such utilization, but the Commissioner (Appeals) disagreed, stating the notification did not address the balance credit as on 28.02.2015.Issue 2: Demand and Recovery of Cenvat Credit UtilizedA show cause notice dated 12.05.2016 demanded recovery of Rs. 13,63,480/- under Rule-14 of the Cenvat Credit Rules, 2004 read with Section-11A(1) of the Central Excise Act, 1944. The Assistant Commissioner confirmed the demand for Rs. 7,41,546/- along with interest and imposed a penalty of Rs. 74,155/-.Issue 3: Imposition of Interest and PenaltyThe Commissioner (Appeals) set aside the penalty, citing that the issue involved interpretation of the Rules and notification regarding utilization of EC and SHEC lying in balance as on 28.02.2015. The CESTAT in the case of Commissioner of Central Excise, Surat-I Versus Prime Furnishing Pvt Ltd. held that no penalty is imposable where the issue is capable of different interpretations.Judgment:The Tribunal considered the appellant's argument that Notification No. 12/2015-CE(NT) should be interpreted to allow utilization of the credit for payment of Central Excise duty, aligning with the Hon'ble Finance Minister's Budget Speech which subsumed EC and SHEC into the Central Excise duty. The Tribunal noted that there was no provision stating that the credit would lapse or could not be used post 01.03.2015.The Tribunal referenced several judgments, including the Supreme Court's decision in Tungbhadra Industries and the Kolkata High Court's decision in Rasoi Ltd., which supported the view that accumulated credit does not lapse without specific legal provisions.The Tribunal concluded that the utilization of the credit by the appellant was justified and set aside the impugned order. The appeal was allowed, and the demand and penalty were annulled. The Tribunal emphasized that if the demand were confirmed, the appellant would be entitled to a refund under Section 142 (7) of the CGST Act, 2017.