TMI Blog2022 (11) TMI 561X X X X Extracts X X X X X X X X Extracts X X X X ..... RATORIES LTD. 2011 (2) TMI 6 - SUPREME COURT] and Rule 14 of the Cenvat Credit Rules the provisions of which were amended to change the words taken or utilized , there cannot be any demand for the interest. As the entire amount of Cenvat credit was reversed prior to issuance of show cause notice, penalty under Section 73(3) of the Finance Act, 1994 is waived off. Appeal dismissed. - Service Appeal No. 86055 of 2016 - A/85924/2022 - Dated:- 28-9-2022 - HON BLE MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL) AND HON BLE DR. SUVENDU KUMAR PATI, MEMBER (JUDICIAL) Dr. Badhe Piyush Barasu, Deputy Commissioner, Authorised Representative, for the Appellant None for the Respondent ORDER PER: SANJIV SRIVASTAVA This appeal has been filed by the Revenue against Orderin- Original No. PUN-EXCUS-001-PR.COM-088-15-16 dated 06.01.2016 passed by the Principal Commissioner of Central Excise, Pune-I. By the impugned order, the Principal Commissioner has held as follows:- ORDER (i) 1 hereby drop the demand of Rs.4,50,79,517/- (Rupees Four Crores Fifty Lakhs Seventy Nine Thousand Five Hundred Seventeen only) and discharge the Show Cause Notice No.ST/05/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Section 68 of the Act read with Rule 6 of the STR, 1994; (c) Section 70 of the Act readwith Rule 7 of the STR, 1994 in as much as that they have failed to file correct return in respect of the service provided by them in Form ST-3 within the prescribed time limit with the Superintendent of Central Excise, during the period from July, 2010 to June, 2012; (d) Rule 6(1) read with Rule 3 of the CCR 2004, in as much as they have availed the CENVAT credit of Rs 3,39,72,291/- during the period prior to 01.07.2010. 2.4 A show cause notice dated 20.10.2015 was issued to the respondent asking them to show cause as to why:- i) Their claim of abatement to the extent of 75% (as provided under Notfn 1/2006 ST as amended) should not be denied and differential service tax as calculated in the table above amounting to Rs 4,50,79,517/- should not be recovered from them, for their failure to abide by the condition of not taking CENVAT credit during the period from 01/07/2010 to 30/06/2012 under provided under proviso to Section 73(1) of the Finance Act 1994. ii) Interest on the said short payment of Service tax should not be recovered from them under the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .3,39,72,219/- prior to 01.07.2010 and disclosed the same in the relevant ST-3 return. As mentioned above, availment of Cenvat credit prior to 01.07.2010 was inadmissible. Hence, it was alleged that the company had wrongly availed the Cenvat credit prior to 01.07.2010. The department had further observed that, for the period from 01.07.2010 to 30.06.2012, the company had discharged its service tax liability by availing the benefit of abatement as provided in Notification no. 1/2006 dated 01.03.2006 (as amended) for the period from 01.07.2010 to 30.06.2012, however the company has also availed Cenvat credit amounting to Rs.1,15,67,014/- on inputs, input services and capital goods. As mentioned above, for the said period from 01.07.2010 to 30.06.2012, the benefit of abatement was available only if the Cenvat credit on inputs, input services and capital good was not availed. Hence it was alleged that the company had wrongly availed the Cenvat credit and hence were not eligible to avail the benefit of the abatement. 12.00 The company voluntarily and on own reversed the entire credit totaling to Rs.4,55,39,305/- (Rs.3,39,72,291/- for the period prior to 1.07.2010 Rs.1,15,67,014/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t credit was not taken. In CCE Vs. M/s. Bill Forge - [2012(34)S.T.T. - 92-279-ELT-209 (Karnataka -H.C.- DB)], the decision of Supreme Court in Ind-Swift was noted, but still it was held that interest is compensatory in nature and if Cenvat credit is reversed before utilization, it means Cenvat credit is not taken and hence interest is not payable. Similar view is taken in CCE Vs. M/s.Pearl Insulation (2013(38)S.T.T.-98]; CCE Vs. M/s. Gokuldas Images [2013(38)S.T.T.-339]; M/s.Oswal Cable Products Vs. CST 2014-46-GST-769]; CCE Vs. M/s.Balrampur Chini Mills [2014(300)ELT-449(CESTAT-SMB)]. The ratio of above decisions is squarely applicable in the instant case. In view of foregoing discussion, it reveals hat entire Cenvat credit wrongly taken was reversed and not utilized also; prior to issue of SCN, hence interest is not payable. Since entire reversal of Cenvat credit is not disputed by noticee, so there is no need to go further elaborate decision on reversal issue. 16.00 The Notification No.1/2006 dated 01.03.2006 restrict availment of Cenvat credit on inputs, Capital goods or Input services which will be used for providing taxable service and should not avail benefit under Not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly we record that the amount reversed by the appellant attributable to the CENVAT credit availed on the common input service on which credit is availed, is considered as enough and the appeal is taken up for disposal with the consent of both the sides, after waiving the condition of pre-deposit of balance amount involved. 4. Heard both the sides and perused the records. From the perusal of the records, we find that the appellant is discharging service tax liability on the various services rendered by him under the category of 'Mandap Keeper Service'. It is also noted that the appellant while discharging the liability under 'Mandap Keeper Service' has availed benefit of Notification No. 1/2006- ST. It is the case of Revenue that the appellant could not have availed the benefit of the Notification as he is availing the benefit of credit on common input services. While the case of the appellant is that they have reversed the entire amount of credit on the common inputs as well as interest thereof on 23/4/2012 and informed the department on 10/5/2001 which could be considered as sufficient compliance of non-availment of CENVAT credit. 5. In our considered vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at in respect of 15 contracts where service tax liability of Rs. 95.88 crores has been confirmed, the appellant has discharged the service tax liability under the works contract scheme. As regards the balance of Rs. 39.09 crores confirmed by the adjudicating authority, the appellant has reversed the credit taken on the inputs and input services and consequently the appellant would be entitled for the benefit of abatement under Notification 1/2006-ST. In a number of decisions, namely Hello Minerals Water (P) Ltd., B.G. Shirke Technology P. Ltd. and Khyati Tours and Travels cited supra, it has been consistently held by this Tribunal as also by the Hon'ble Allahabad High Court that reversal of Cenvat credit amounts to non-availment of credit and, therefore, the benefit of Notification 1/2006- ST cannot be denied. The adjudicating authority has not considered these decisions and has not given any finding as to why these decisions are inapplicable to the facts of the appeal before us. Therefore, the confirmation of the demand to the extent of Rs. 39.09 crores also does not appear to be sustainable in law. 20.00 Hon'ble CESTAT in C.C.E. Vadodara Vs. M/s. Ram Krishna Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s follows:- 04.2 However, the Committee is of the view that the impugned order is not legal, proper and correct to the extent of not appropriating the inadmissible Cenvat credit that was reversed, not upholding the interest demand and non imposition of penalty 04.3 Though the assessee reversed the inadmissible Cenvat credit that was shown as opening balance as on 01.07.2010 they did so only after being pointed out by Audit. They failed to pay the interest on the wrong availment of inadmissible Cenvat credit. 4.3 Since the basic fact is that the respondent has reversed the entire Cenvat credit taken by them even prior to issuance of the notice without utilizing the same, we do not find any merit in the appeal filed by the Revenue. This appeal basically does not challenge the dropping of demand by disallowing the abatement claimed, but seeks to ask for interest on the Cenvat credit wrongly taken by the respondent and for imposition of penalty on the respondent. The Principal Commissioner has in para 15 of the impugned order very categorically discussed the issue and has recorded his finding that not a single penny of the Cenvat credit taken was utilized before its re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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