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2020 (2) TMI 228 - AT - Service TaxDemand of interest and penalty - irregularly availed CENVAT credit on BCD reversed on being pointed out - HELD THAT - The appellant had sufficient balance during the relevant period and has not utilized the same. Therefore in view of the decision of the Hon ble Karnataka High Court in the case of COMMISSIONER OF CENTRAL EXCISE SERVICE TAX LARGE TAXPAYER UNIT BANGALORE VERSUS M/S BILL FORGE PVT LTD BANGALORE 2011 (4) TMI 969 - KARNATAKA HIGH COURT the appellant is not liable to pay the interest and the penalty. CENVAT Credit - input services - insurance of vehicles - HELD THAT - The vehicle belongs to the company and are used for an activity indirectly in relation to production and therefore by the amendment in the definition of input service w.e.f. 01.04.2011 the services used for maintenance of vehicle is not excluded because the same is not used for personal use of a particular person - credit allowed. CENVAT credit - input services - Outdoor Catering Service and Health Insurance Charges - HELD THAT - The impugned order is wrong in denying the CENVAT credit of Service Tax paid on Outdoor Catering Service and Health Insurance Charges which had already been allowed in the OIO and the Department did not file any appeal against that nor the appellant has filed appeal before the Commissioner regarding Outdoor Catering Service and Health Insurance Charges - credit allowed. Appeal allowed - decided in favor of appellant.
Issues:
1. Irregular availment of credit of BCD 2. Availment of credit of Service Tax on ineligible services 3. Reversal of credits, interest, and penalty imposition 4. Denial of CENVAT credit on certain services 5. Applicability of interest and penalty 6. Eligibility of credit for maintenance of vehicles 7. Sustainability of Commissioner (A)'s order Analysis: 1. The appeal was against the Commissioner (A)'s order rejecting the appellant's appeal and upholding the Original Order-In-Original (OIO) which demanded the reversal of irregularly availed credit of Basic Customs Duty (BCD) and Service Tax credit on ineligible services. The appellant had reversed the irregular BCD credit and paid interest under protest. The lower authority held for reversal of BCD credit along with interest and penalty, while allowing a portion of the Service Tax credit and imposing penalties under CCR, 2004. 2. The appellant argued that the impugned order was unsustainable as they had reversed the irregular credit promptly upon detection, maintaining sufficient balances in their accounts. They contended that the balance was never less than the reversed amount, hence no interest was due. Additionally, they challenged the denial of credit for maintenance of vehicles, asserting eligibility as the vehicles were used indirectly in production activities. 3. The Assistant Commissioner (AR) defended the impugned order, leading to a detailed submission and counter-submission by both parties. The Tribunal, after considering the arguments and evidence, found that the appellant had maintained sufficient balances, citing precedents to support the non-liability for interest and penalty. The Tribunal also ruled in favor of the appellant regarding the eligibility of credit for maintenance of vehicles and the denial of certain CENVAT credits. 4. The Tribunal set aside the impugned order, providing consequential relief, if any. The judgment highlighted the appellant's compliance in reversing irregular credits promptly, the sufficiency of maintained balances, and the eligibility of credit for maintenance of vehicles. The Tribunal found the Commissioner (A)'s order unsustainable in denying certain credits, ultimately allowing the appeal. The judgment was pronounced and dictated in open court on 30/01/2020.
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