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2024 (5) TMI 795 - CESTAT NEW DELHICENVAT Credit - exempt service or not - amount of interest received by the appellant on the delayed payment of the amount of consideration received from the sale of flats/villas/shops - HELD THAT:- The penal interest clauses in the agreement are in the nature of providing a safeguard to the commercial interest of the contracting parties. Accordingly, in the present case, the interest amount received by the appellant is in form of compensation towards the loss suffered by the appellant due to such delayed payments on the part of the customers. Therefore, the subject amount of interest received by the appellant are merely flow of money to deter such acts and cannot be regarded as a consideration for any activity undertaken by it. Thus it is clear that appellant is rendering only one taxable service i.e. of Construction. No question arises for invoking Rule 6(1)(3) of Cenvat Credit Rules, 2004. Consequently, the appellant is not liable to make reversal of Cenvat Credit in respect of receipt of interest as per new Explanation 3 to Rule 6(1) of Cenvat Credit Rules. The impugned show cause notice has been issued based on a frivolous ground. Hence the same is held void. The findings arising out of such show cause notice are not sustainable. The order under challenge is therefore set aside - Appeal allowed.
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