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2017 (2) TMI 539 - CESTAT HYDERABAD

2017 (2) TMI 539 - CESTAT HYDERABAD - TMI - Interest - penalty - reversal of irregularly availed credit - whether the appellant is liable to pay the interest and penalty for the irregularly availed credit, which was reversed prior to utilisation according to the appellant? - Held that: - having sufficient balance in the CENVAT account in any of the category namely input, capital goods or input services would suffice for the purpose of considering whether the appellant had reversed the credit .....

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dit, which was reversed prior to utilisation according to the appellant. 2. The appellants are engaged in providing taxable services and are registered with the service tax department. They are availing the facility of CENVAT Credit on capital goods and input services. During the period 2011-12 the appellants had availed credit of ₹ 13,26,136/- on rent-a-cab service and ₹ 40,626/- on air travel services as input services. They later reversed the said amount before issuance of show ca .....

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peal before the Commissioner (Appeals) who upheld the liability of interest and penalty. The appellants are now before the Tribunal aggrieved by the demand of interest and penalty. 3. On behalf of the appellant, the Ld. Consultant Sh. Sumanth argued that the appellant had reversed the credit prior to utilisation and therefore the levy of interest and penalty is unjustified. He submitted that the authorities below have confirmed the demand of interest and penalty observing that the appellant did .....

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CE, Bangalore Vs Bill Forge Pvt Ltd., [2012 (279) E.L.T. 209 (Kar)] (iii) B. Girijapathi Reddy & Co Vs CCE & ST, Guntur in Final Order No. A/30569-30570/2015 dated 29.06.2016. 4. On behalf of the department, the Ld. AR Sh. Nagraj Naik reiterated the findings in the impugned order. He submitted that the appellant did not have sufficient credit balance under the category of input service during the relevant time when the credit was reversed and therefore the levy of interest and penalty i .....

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gory at the time of reversing the irregularly availed credit. For this reason the Commissioner (Appeals) has held that the decision laid in Bill Forge Pvt Ltd., (supra) and other cases is not applicable. I have perused the closing balance shown in para 7 of the impugned order. It is seen that during the relevant time the appellant did not have sufficient balance in the input service credit of the CENVAT account whereas there was sufficient balance in the capital goods credit. The CENVAT Credit R .....

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tal goods. If the appellant had sufficient balance in this pool of credit, it has to be concluded that the alleged credit remains unutilised. The discussion in this regard in para 13 of the Division Bench of the Tribunal in the case of Pipavav Shipyard Ltd vs CCE [2016 (41) STR 151 (Tri-Ahmd)] is worth reproducing. 13. The Larger Bench of the Tribunal in the case of Commissioner of Customs & C.Ex., Meerut-I v. Modi Rubber Ltd. - 2000 (119) E.L.T. 197 (Tri.-LB), held that the declaration file .....

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be taken as credit. Similarly, a provider of taxable service is also entitled to take credit of specified excise duty, additional duty of Customs and Service Tax in respect of input service and utilised credit from these sources for the purpose of paying service. Rules permit taking of credit under a common pool and permit the use of the credit from common pool for different purposes and there is no restriction placed to the effect that credit accounts should be maintained for use for manufactur .....

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le with them either for payment of excise duty on the final products or for payment of service tax on the output services as stipulated in sub-rule (4) of Rule 3 of Cenvat Credit Rules, 2004. The restriction on utilisation of Cenvat credit stipulated relates only for specific type of duties, i.e., education cess on excisable goods or payment of education cess on output service. There is no restriction for utilisation of common input credit availed on the inputs and also on input service for paym .....

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ed that the appellant has availed credit which is available to them and there is no provision for segregation of input/Cenvat credit for payment of excisable goods and for payment of service tax. The said issue came up before this Tribunal in the case of Forbes Marshall Pvt. Ltd v. Commissioner of Central Excise, Pune - 2010 (258) E.L.T. 571 (Tribunal) 2010 (20) S.T.R. 186 (Tribunal) wherein this Tribunal has observed that there is no provision in Cenvat Credit Rules, 2004, for segregation of in .....

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