2018 (11) TMI 1378 - AT - Central Excise

Quantum of demand - appellant are claiming that there is some discrepancy in the demand confirmed to the tune of Rs. 2, 28, 032/- whereas as per their calculation the total demand should have been Rs. 1, 55, 768/- - Held that - The issue is covered by the judgment of the Hon ble Supreme Court in the case of Commissioner of Central Excise Belgaum vs. Vasavadatta Cements Ltd. 2018 (3) TMI 993 - SUPREME COURT . In the aforesaid judgment the Hon ble Supreme Court has held that w.e.f 01.04.2008 the cenvat credit is available only upto the place of removal. The demand of duty alongwith interest is upheld and since the dispute relates to interpretation of statutory provisions and there were diverse decisions of various High Courts and the matter has recently been stayed at rest by the Hon ble Supreme Court the imposition of penalty in the present case is not warranted - the penalty imposed under Rule 15(2) of the Cenvat Credit Rules 2004 read with Section 11AC of the Central Excise Act 1944 is set aside. Regarding the dispute of quantum of demand the matter is remanded to the adjudicating authority to verify the documents of the assessee in respect of their claim and to pass an order in accordance with law - Appeal allowed in part.

Summary

Issues:
1. Availment of cenvat credit on carriage outward service under Reverse Charge Mechanism.
2. Disallowance and recovery of credit on input service tax.
3. Imposition of penalty under Rule 15(2) of the Cenvat Credit Rules, 2004.
4. Discrepancy in the demand confirmed by the department.
5. Interpretation of statutory provisions regarding cenvat credit availability.

Analysis:
1. The appellant, engaged in manufacturing Ferro Silico Manganese, availed cenvat credit on carriage outward service for transporting finished goods to buyers' premises under the Reverse Charge Mechanism. A show cause notice was issued for disallowance and recovery of credit on input service tax. The adjudicating authority confirmed the duty demand, interest, and imposed a penalty under Rule 15(2) of the Cenvat Credit Rules, 2004. On appeal, the Commissioner upheld the duty demand and interest but reduced the penalty. The appellant contested the adjudication order, claiming the liability was lower based on their calculations and submitted documents supporting their case.

2. The consultant for the appellant argued that the adjudicating authority did not scrutinize the transport documents properly. They contended that the liability calculated by the department was higher than their admitted liability, which they had already paid. The appellant cited precedents where penalties were not imposed in disputes related to statutory interpretation. The Departmental Representative supported the lower authorities' order.

3. The Tribunal found that the appellant did not dispute the duty and interest demand and had paid 50% of the penalty on the admitted demand. However, a discrepancy in the confirmed demand amount was noted. Referring to a Supreme Court judgment, the Tribunal upheld the duty demand and interest but set aside the penalty imposition. The Tribunal reasoned that since the dispute involved the interpretation of statutory provisions and there were conflicting decisions from various High Courts, penalty imposition was not justified. The matter of the quantum of demand was remanded to the adjudicating authority for further verification.

4. The Tribunal's decision was based on the Supreme Court's ruling regarding cenvat credit availability only up to the place of removal from 01.04.2008 onwards. As the issue involved interpretation of statutory provisions and recent Supreme Court decisions, the penalty was waived, and the matter of demand discrepancy was referred back for review. Ultimately, the appeal was partly allowed, emphasizing the importance of statutory interpretation and proper verification of documents in such cases.