2017 (4) TMI 1179 - AT - Service Tax

Wrong availment of Cenvat Credit twice - duty paying invoices - demand of duty with interest and penalty - appellant immediately reversed the Cenvat Credit availed twice - Held that - when the appellant is having sufficient balance in their Cenvat Credit account therefore, it cannot be alleged that there was a mala-fide intention to take inadmissible Cenvat Credit on invoice twice. It is the inverdent mistake - the charge of mala-fide intention is not sustainable. Period of interest - Held that - the SCN were issued by invoking extended period of limitation and charge of mala-fide intention is not there, therefore, SCN were issued to the appellant are the barred by limitation. The appellant has not disputing the payment of Cenvat Credit taken twice, therefore, same is confirmed but they will not be the demand of interest and penalty on the appellant are also set aside - appeal allowed - decided partly in favor of appellant.

Summary

Issues:
- Demand of interest and penalty for wrong availment of Cenvat Credit twice on same invoices.

Analysis:

Issue 1: Demand of Interest and Penalty
The appellant appealed against orders demanding interest and penalty due to wrongly availing Cenvat Credit twice on the same invoices. The appellant reversed the excess credit upon audit discovery, leading to show cause notices being issued invoking the extended period of limitation. The Revenue argued mala-fide intention due to undetected credit availing, citing the decision in Union of India Vs. Ind-Swift Laboratories Ltd. The appellant contended that immediate reversal upon audit discovery, with sufficient credit balance, negates mala-fide intention, referencing the case of Vodafone Mobile Services Limited Vs. Commissioner Service Tax, Pune. Additionally, the appellant argued that demand of interest by invoking extended period lacked merit, citing the case of CCE Vs. VAE VKN Industries Pvt. Ltd. The Tribunal found no mala-fide intention due to sufficient credit balance, aligning with previous rulings. Regarding interest demand, the Tribunal held that as show cause notices were issued under extended limitation without evidence of mala-fide intention, they were time-barred.

Outcome:
The Tribunal confirmed the Cenvat Credit reversal but set aside the demand for interest and penalties, ruling in favor of the appellant. The appeals were disposed of accordingly.