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2016 (2) TMI 361 - AT - Central ExciseAdmissibility of credit of service tax paid on input service used in the manufacture of exempted as well as dutiable goods - demand of interest and imposition of penalty - Held that:- The demand of interest is countered by the learned Counsel by putting forward the contention that the credit was reversed prior to the utilization. Opening and closing balance of the credit amount pertaining to the respective months substantiates this contention put forward by the appellant. The judgements relied upon by the learned counsel analyses the issue of payment of interest in the case of reversal of credit. Hon’ble Karnataka High Court in the case of CCE, ST and LTU, Bangalore vs. Bill Forge Pvt.Ltd. (2011 (4) TMI 969 - KARNATAKA HIGH COURT ) held that before utilization of credit, if the same has been reversed it would amount to not taking credit and would not attract liability of interest. Similar view has been taken in the other judgements cited and placed before us. Following the principle laid in these judgements, we hold that as the credit has been reversed before utilization, the demand of interest is unsustainable. Imposition of penalty - Interestingly, it is seen stated in the show cause notice that the same is issued invoking the extended period of limitation. As per records, the department has come to know about wrongful availment of credit and informed the appellants the same on 9.8.2007. The show cause notice is dated 24.1.2008 which in our view is within the period of limitation. We do not find any ground necessary for invoking the extended period of limitation. Be that as it may, the contention of the appellant that there was no suppression of facts or wilful mis-statement is not without force. On 4.7.2006, the appellants have written letter explaining the manner of availing the credit of inputs, capital goods and input service. Further, when the department called for to furnish the details regarding availment of credit, the appellants had furnished the same. On such score, we hold that the respondent have miserably failed to establish suppression or mis-statement with intention to evade payment of duty on the part of the appellants. Pursuant to the above reason, we are of the considered view that the imposition of penalty is unwarranted.
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