TaxTMI 
TaxTMI 
TaxTMI 
2025 (9) TMI 621
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....use notice dated 23.02.2017 proposing recovery of Cenvat Credit of Rs. 1,55,69,580/- along with interest and imposition of penalty on the appellant under Rule 15(3) of the Cenvat Credit Rules, 2004 (CCR,2004) read with Section 78 of the Finance Act, 1994. A separate proposal for imposition of penalty on Shri. Kirit C Doshi, Director of the appellant under Section 78A of the Finance Act 1994 and Rule 15 of the CCR, 2004 was also made. 1.2 The above show cause notice was decided by the adjudicating authority wherein, he besides confirming the entire demand of Cenvat credit along with applicable interest, also imposed equal penalty on the appellant under Rule 15 (3) of CCR, 2004 and Section 78 of the Finance Act, 1994. He also imposed penalty of Rs. 25 lakhs on Shri. Kirit C Doshi Director under Rule 26 of the Central Excise Rules, 2002. Aggrieved with this order, Appellant filed appeal before the Commissioner (Appeals) who vide impugned order dated 23.05.2018 held that as the appellant has used Cenvat Credit of Rs. 1,08,88,792/- only out of the availed credit of 1,55,69,580/-, the penalty of Rs. 1,08,88,792/- only is imposed. He also held that penalty of 25% of the defaulted amount ....
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..... They had written two lakh letters dated 20.05.2015 & 05.06.2015 to the department after payment of dues for closure of the proceedings under section 73 (4A) and not to issue any show cause notice. They rely on the decision of Mumbai Tribunal in the case of Commissioner of Central Excise, Pune-III Vs. Wings Travels reported in 2017 (47) STR 225 (Tri. Mumbai) e. The adjudicating authority has invoked extended period on the ground that full break up of Cenvat Credit was not given in ST-3 returns. This reasoning is not correct as there were no columns in ST-3 return to give details of Cenvat Credit availed with full break up. As such, extended period of limitation is not invokable. f. The input service credit relates to construction of factory on their plot which was given on lease. They had also paid the service tax on the rental income. g. Provisions of Section 73(4A) have wrongly been interpreted by the Appellate authority. They had already paid full Cenvat credit amount along with interest & penalty at the rate of 1% per month and therefore, the case should have been closed without issue of show cause notice. No findings have been given on validity of show cause notice i....
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....he matter should have been closed.. He relied on the following case law: * Commissioner of Central Excise, Pune-III vs. Wings Travels [reported in 2017 (47) STR Page 225 (Tri. Mumbai). * ABB LIMITED Vs. COMMISSIONER OF SERVICE TAX, BANGALORE - 2018 (2) TMI 933 BANGALORE. 4. Learned AR on the other hand, reiterated the finding of the lower authority. He mentions that availment of wrong credit came to the notice of the department only when search was conducted by the preventive officers on the basis of prior intelligence. Therefore, element of mens rea is clearly visible and penalty under section 78 of the Finance Act, 11994 read with Rules 15 (3) has rightly been imposed. He further argued that the provisions of section 73(A) of the Finance Act, 1194 which were omitted w.e.f. 14.05.2015 are not applicable in their case. As the appellant had availed wrong credit and utilized the same, penalty is imposable under Rules, 15 (3) of CCR, 2004 in terms of Section 78 of the Finance Act, 1994. 5. We have heard the rival submissions. As per the department, the appellant had availed inadmissible Cenvat Credit of Rs. 1,55,69,580/- on works contract service for construction of factory bu....
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.... on the appellant under Rule 15 (3) of the CCR, 2004 for availment and utilization of wrong credit. 5.2 We find that the adjudicating authority has imposed penalty of Rs. 1,55,69,580/- under Rule 15 (3) of the CCR, 2004 in terms of the provisions of Section 78 of the Finance Act, 1994. In appeal against this order, the appellate authority vide impugned order has reduced this penalty from Rs. 1,55,69,580/- (which was equal to total Cenvat Credit availed) to Rs. 1,08,88,792/- on the ground that only this much credit was utilized by the appellant. He also gave option to pay 25% of this amount towards penalty under proviso to Section 78 of the Finance Act, 1994. We however find that the argument of the appellant is that since they had paid full Cenvat Credit along with interest and penalty at the rate of 1% per month in terms of Section 73 (4A) of the Finance Act, 1994, their case should have been closed and show cause notice should not have been issued. The provisions of Section 73 (4A) which was Omitted vide THE FINANCE ACT, 2015 w.e.f. 14th May 2015 is reproduced below:- "[(4A) Notwithstanding anything contained in sub-sections (4)), where during the course of any audit, investig....
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....-levied or short-paid or erroneously refunded, by reason of - (a) fraud; or (b) collusion; or (c) wilful mis-statement; or (d) suppression of facts; or (e) contravention of any of the provisions of this Chapter or of the rules made there under with intent to evade payment of service tax, the person, liable to pay such service tax or erroneous refund, as determined under sub-section (2) of section 73, shall also be liable to pay a penalty, in addition to such service tax and interest thereon, if any, payable by him, which shall be equal to the amount of service tax so not levied or paid or short-levied or short-paid or erroneously refunded: Provided that where true and complete details of the transactions are available in the specified records, penalty shall be reduced to fifty per cent. of the service tax so not levied or paid or short-levied or short-paid or erroneously refunded: Provided further that where such service tax and the interest payable thereon is paid within thirty days from the date of communication of order of the Central Excise Officer determining such service tax, the amount of penalty liable to be paid by such person under the first proviso s....