AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (9) TMI 1400
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....ad availed the cenvat credit of service tax paid on construction services during the years 2013-14 and 2014-15. On being pointed out that the input service credit taken on the construction services and related design services are excluded from the definition of 'input services,' the respondent reversed the entire credit along with interest thereof in July and August 2015. The department was of the view that by the acts of commission and permission, the respondent appeared to have contravened the provisions of the Cenvat Credit Rules 2004 (CCR) rendering themselves liable for imposition of applicable penalty and that under the self-assessment procedure in vogue, the onus is on the respondent to take credit of service tax only on those services which are eligible as per the provisions of the CCR. Hence, a show cause notice dated 24-11-2015 was issue to the Respondent proposing imposition of penalty under Rule 15 of the Cenvat Credit Rules ibid read with section 11 AC of the Act ibid, alleging suppression of facts with an intention to evade payment of duty and invoking extended period of limitation. 3. After due process of law, the adjudicating authority passed the impugned....
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....he adjudicating authority ought to have discussed the presence of mens rea for invoking rule 15 of Cenvat Credit Rules 2004 after which only the quantum of penalty under section 11 AC would arise for determination and once that is established, there is no discretion to waive penalty under section 11 AC. Reliance is based on the decision in Union of India versus Dharmendra textile processors, 2008 (231) ELT (SC). iv) The decisions of the CESTAT relied on by the adjudicating authority were not applicable. That since audit had pointed out the irregularity which was accepted by the respondent and paid with interest, the wrong availment of credit with mens rea has been proved beyond doubt and at least 50% penalty could have been imposed. 6. Ms. Charulatha, advocate appearing on behalf of the respondent, contended that the alleged construction and design services related to the modernization and upgradation of the respondents petroleum refinery and the respondent was under the bona fide belief that the Cenvat credit availed by them was eligible. Reliance in this regard is placed on the cases of M/s. Jai Balaji Industries Limited Commissioner of Central Excise, Customs and Ser....
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.... 10. Ld. Counsel strenuously urged that in the absence of determination of tax payable as per section 11 A(10) of the Central Excise Act, the question of imposition of penalty under section 11 AC does not arise at all. Reliance is placed on the decision in: • Ispat Industries Limited Commissioner of Central Excise. Raigad 2012 (275) ELT 456 (Tri-Mum) and • Chiranjeevi Industries P. Limited Vs. Commissioner of Customs and Central Excise, Visakhapatnam - 2015 (339) ELT 274 (Tri. Hyd.). 11. It was also submitted that Rule 15 of the Cenvat Credit Rules is a subordinate legislation and penalty cannot be imposed independent of section 11 AC of the Central Excise Act. 12. Heard both sides, carefully perused the appeal records as well as the case laws submitted as relied upon. 13. The only issue that arises for consideration is whether the impugned order in original by which the Adjudicating Authority has refrained from imposing any penalty under Rule 15 of the Cenvat Credit Rules, 2004, read with Section 11 AC of Central Excise Act, 1944 is tenable. 14. At the outset, we find that the respondent has raised certain contentions on merits in its written....
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....hat the correct information was not disclosed deliberately to escape from payment of duty. Where facts are known to both the parties the omission by one to do what he might have done and not that he must have done, does not render it suppression. Authorities are plenty, and a reference to the decisions of the Apex Court in Pushpam Pharmaceuticals Company v CCE, Bombay, 1995 (78) ELT 401 (SC) and Uniworth Textiles v CCE, Raipur, 2013 (288) ELT 161 (SC) would amply suffice. In the latter decision, the Honourable Apex Court has also held that: "It is a cardinal postulate of law that the burden of proving any form of mala fide lies on the shoulders of the one alleging it. This Court observed in Union of India v. Ashok Kumar & Ors. -- (2005) 8 SCC 760 that "it cannot be overlooked that burden of establishing mala fides is very heavy on the person who alleges it. The allegations of mala fides are often more easily made than proved, and the very seriousness of such allegations demand proof of a high order of credibility." 17. That apart, while the Department has emphasized in this case on the relevant period being that when self-assessment was prevalent, pertinently, it is see....
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....aintainable. 15. In this regard I find that in the case of M/s, Ispat Industries Ltd vs. Commissioner of Central Excise, Raigad [2012 (275) ELT 456 (Tri--Mum)], the Hon'ble Tribunal has held that when the show cause notice does not propose demand of duty, determination under Section 11A(2) does not arise. Further the Tribunal has held that in the absence of determination of duty, the question of imposition of penalty under Section 11AC does not arise at all. Similarly, in the case of M/s. Chiranjeevi Industries Private Limited and Commr of Cus & C.Ex. Visakhapatnam [2016 (339) ELT 274 (Tri)], the Hon'ble Tribunal observed that when the show cause notice itself does not propose demand of duty, determination under Section 11A (2) does not arise and that in the absence of determination of duty, the question of penalty under Section 11AC does not arise at all. 16. In view of the foregoing I hold that in the absence of amount determined under Section 11A (10) of Central Excise Act, 1944, in this order, I am restrained from the imposition of penalty under Section 11AC of Central Excise Act, 1944. Accordingly, I pass the following order. ORDER I....