Custom, Excise & Service Tax Tribunal
M/S. Im Gears Pvt. Ltd vs Cce, Chennai Iv on 27 October, 2017
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, CHENNAI
Appeal No. E/41998/2017
(Arising out of Order-in-Appeal No. 295/2017 (CXA-II) dated 31.5.2017 passed by the Commissioner of Central Excise (Appeals), Chennai)
M/s. IM Gears Pvt. Ltd. Appellant
Vs.
CCE, Chennai IV Respondent
Appearance Ms. S. Sridevi, Advocate for the Appellant Shri R. Subramaniyam, AC (AR) for the Respondent CORAM Honble Ms. Sulekha Beevi C.S., Member (Judicial) Date of Hearing / Decision: 27.10.2017 Final Order No. 42450 / 2017 The brief facts are that the appellant is a manufacturer of motor vehicle parts and are registered with the Central Excise Department. They have two more plants situated at Tambaram and Kancheepuram. On verification of accounts of Plant I, for the period April 2011 to March 2014,it was noticed that the appellant/Plant I had taken incorrect CENVAT credit on the input services pertaining to Plant III in regard to manpower supply services received in Plant III. A show cause notice was issued proposing to recover an amount of Rs.31,17,697/- being irregularly availed credit along with interest and also for imposition of penalty. After due process of law, the original authority observed that since amendment was brought forth in Rule 14 of CENVAT Credit Rules, with effect from 1.4.2012, the appellant having reversed the credit which was wrongly availed by them would not be liable to pay interest after 1.4.2012. However, he confirmed the demand of interest prior to 1.4.2012 and also imposed penalty of Rs.15,58,845/-. In appeal, the Commissioner (Appeals) upheld the same. Hence this appeal.
2. On behalf of the appellant, ld. counsel Ms. Sridevi submitted that the appellant had reversed the credit of Rs.31,17,697/- immediately on being pointed out by the department and before utilization of the same. She submitted that the said issue whether appellant is liable to pay interest on the irregularly availed credit, which was reversed before utilization, is settled by the decision of the Honble High court of Madras in the case of Commissioner of Central Excise, Madurai Vs. Strategic Engineering (P) Ltd. 2014 (310) ELT 509 (Mad.) and also in the case of Commissioner of Central Excise, Bangalore Vs. Bill Forge Pvt. Ltd. 2012 (279) ELT 209 (Kar.) passed by the Honble High Court of Karnataka.
3. The ld. AR Shri R.Subramaniyam reiterated the findings in the impugned order.
4. Heard both sides.
5. I find that pursuant to the amendment brought forth with effect from 1.4.2012, the credit availed and utilized was substituted with the words credit availed or utilized. Thereby, the original authority has given the benefit of setting aside the demand of interest after the period 1.4.2012. The position whether the appellant is liable to pay interest when the wrongly availed credit has been reversed before utilization is settled by the decisions in the cases relied upon by the ld. counsel for the appellant. The Honble High Court of Madras in the case of Strategic Engineering (P) Ltd. (supra), has categorically held that even prior to the amendment, the assessee cannot be liable to pay interest or penalties.
6. Following the same, I am of the view that the demand of interest and penalties imposed is unjustified. The impugned order is set aside and the appeal is allowed to the extent to setting aside the demand of interest and penalties imposed without disturbing the demand of CENVAT credit wrongly availed. The appeal is allowed in the above terms.
(Dictated and pronounced in open court) (Sulekha Beevi C.S.) Member (Judicial) Rex 4