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2018 (6) TMI 43

een reversed by the respondent prior to its utilisation, the Tribunal rightly held the demand of interest unsustainable. - Penalty - intent to evade duty - Held that:- since there was no intention to evade payment of duty on the part of the respondent, the same was also held to be unwarranted. - Appeal dismissed - decided against appellant. - CEA No. 38 of 2016 (O&M) - 15-5-2018 - MR. AJAY KUMAR MITTAL AND MR. TEJINDER SINGH DHINDSA, JJ. Mr. Amit Goyal, Advocate, Senior Standing Counsel for the appellant-revenue Mr. Amrinder Singh, Advocate for the respondent ORDER Ajay Kumar Mittal, (ACJ). 1. This appeal has been preferred by the appellant-revenue under Section 35G of the Central Excise Act, 1944 (in short, the Act ) against the i .....

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cleared under this notification. It was observed from the records of the respondent that it had availed the Cenvat credit of service tax on input service which was used in the manufacture of duitable as well as exempted goods whereas as per Rule 6(1) of the Cenvat Credit Rules, 2004 (in short, the Rules ), the Cenvat credit shall not be allowed on such quantity of inputs or input service which is used in the manufacture of exempted goods or exempted services. On being pointed out by the Department on 09.08.2007, the respondent reversed the service tax credit of ₹ 65,21,123/- under protest on 16.10.2007 on the proportional basis of clearance value of dutiable goods and exempted goods. The respondent during the period from January 2007 .....

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aid on input service. It did not maintain separate account as provided under Rule 6 of the Rules. The department pointed out that the credit availed on the input service was not admissible to the respondent. On pointing out the defects, the respondent reversed the credit amount of ₹ 65,21,123/- pertaining to the period from January 2007 to March 2007 under protest on 16.10.2007. A show cause notice was issued to the respondent on 24.01.2008. The demand of inadmissible credit of ₹ 64,60,537/- alongwith interest, and penalty was confirmed. At the time of hearing before the Tribunal, learned counsel for the respondent confined his argument with regard to the demand of interest and imposition of penalty. According to the respondent, .....

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. Hon ble Karnataka High Court in the case of CCE, ST and LTU, Banglore Vs. Bill Forge Pvt. Ltd- 2012 (279) ELT 209 (supra), 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 judgments cited and placed before us. Following the principle laid in these judgments, we hold that as the credit has been reversed before utilization, the demand of interest is unsustainable. 7. Next question to be considered is imposition of penalty. Interestingly, it is 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 wron .....

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