Custom, Excise & Service Tax Tribunal
Bharti Hexacom Limited vs Jaipur-I on 26 November, 2018
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL,
WEST BLOCK NO.2, R.K. PURAM, NEW DELHI-110066
BENCH-SM
COURT -IV
Service Tax Appeal No.ST/51014/2018-ST [SM]
[Arising out of Order-in-Appeal No.99(SM)ST/JPR/2018 dated
31.01.2018 passed by the Commissioner (Appeals), Central
Excise & Central Goods and Service Tax, Jaipur]
M/s. Bharti Hexacom Limited ...Appellant
Vs.
CCE, Jaipur ... Respondent
Present for the Appellant : Ms. Sukriti Das, Advocates Present for the Respondent: Mr.P.R. Gupta, D.R. Coram: HON'BLE MRS. RACHNA GUPTA, MEMBER (JUDICIAL) Date of Hearing/Decision: 26/11/2018 Final ORDER NO. 53341 /2018 PER: RACHNA GUPTA Present appeal has been directed against the order of Commissioner (Appeals) bearding No. 7109 dated 2nd February, 2018.
2. The factual matrix in brief relevant for the purpose is that the appellant is engaged in providing telecommunication services, business auxiliary services, business support services, GTA and sponsorship services. The Department during the course of audit of the records of the appellant for the period 2 ST/51014/2018-ST [SM] 2007-08 to 2008-09 observed that appellant has availed cenvat credit of duty paid on capital goods. However, has not paid an amount equal to the cenvat credit amounting to Rs.6,03,086/- on clearance of the said capital goods. Rather, suo moto reversed an amount equal to Rs.1,64,43,045/-. Vide a show cause notice No. 1906 dated 23rd October, 2012, the recovery of the aforesaid cenvat credit of Rs.6,03,086/- alongwith the recovery of interest on the aforesaid amount of Rs.1,64,43,045/- was proposed alongwith interest at the appropriate rate and the proportionate penalties. The said proposed demand was confirmed as a whole vide Order bearing No.606 dated 31st January, 2014 / 10th February, 2014. Being aggrieved, an appeal was filed before Commissioner (Appeals), who has set aside the demand for recovering the amount of Cenvat credit. However, confirmed the demand of interest on the credit reversed, thereby partly allowing the appeal. Still aggrieved, the appellant is before this Tribunal.
3. I have heard Ms. Sukriti Das, ld. Counsel for the appellant and Shri P.R. Gupta, ld. D.R. for the Department.
4. It is submitted on behalf of the appellant that there has been an amendment dated 1st April, 2012 in Rule 14 of Cenvat Credit Rules in the year 2014 vide the word "or" therein has been substituted with word "and".
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ST/51014/2018-ST [SM]
5. She has relied upon the previous decisions of this Tribunal impressing upon that even prior the said amendment while relying upon the decision of Hon‟ble High Court of Karnataka in the case of CCE & ST, Bangalore v. Bill Forge Pvt. Ltd. reported in 2012 (26) STR 204 that the demand of interest has been set aside. Those decisions are impressed upon to have been passed in appellant‟s own case. It is prayed that relying thereupon the order under challenge qua confirming the demand of interest be also set aside and appeal be allowed.
6. While rebutting these arguments, ld. DR has impressed upon para13 and 14 of the order under challenge, where the Commissioner (Appeals) has clearly explained 3 circumstances to individually be sufficient enough to invoke the liability of assessee to pay interest i.e.
(i) In the case of cenvat credit taken
(ii) In the case of cenvat utilized
(iii) In case of cenvat being erroneously refunded. It is impressed upon that the said decision find basis from the adjudication of Hon‟ble Apex Court decision in Civil Appeal No. 1976/2011 reported as 2011 (265) ELT 3 (SC). Thus, there is no infirmity, as alleged, in the impugned order. Appeal is prayed to be dismissed.
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ST/51014/2018-ST [SM]
7. After hearing both the parties, I observe that the only point for consideration herein is as to whether mere taking of cenvat credit without actually utilizing it would carry the liability of interest/penalty upon the assessee. For the purpose, rule 14 of Cenvat Credit Rules is relevant which reads as follows:-
Rule 14 - Recovery of CENVAT credit wrongly taken or erroneously refunded "where the CENVAT credit has been taken or utilized wrongly or has been erroneously refunded, the same along with interest shall be recovered from the manufacturer or the provider of the output service and the provisions of sections 11A and 11AB of the Excise Act or sections 73 and 75 of the Finance Act, shall apply mutatis mutandis for effecting such recoveries."
8. It is being the acknowledged fact that vide an amendment in this rule the word „or‟ used herein has been substituted with word „and‟. This particular amendment makes it clear that it is only when cenvat credit taken is utlised that the assessee shall be liable to pay the interest. Else no interest liability shall devolve upon the assessee. No doubt, the period in dispute is the period prior to the aforesaid amendment. But law has been settled that any amendment, which is beneficial in nature for the assessee has to be given a retrospective effect, as far as the assessee is concerned as was held by Hon‟ble Apex Court in the case of Suchitra Components Ltd. vs. CCE, Guntur -2007 (208) ELT 321 (SC). The decision as relied upon by the appellant in the case 5 ST/51014/2018-ST [SM] of Bill Forge Pvt. Ltd. (supra) makes it clear that even prior the amendment, the opinion formed was that since the assessee has not taken the benefit of the cenvat credit taken except entry in their account books, there was no liability to pay the interest. It was appreciated that once entry was reversed, it is as if that the cenvat credit was not availed. The Revenue‟s plea for assessee to be at liberty to utilize the credit immediately after making the entry was held not sustainable. Post amendment the Hon‟ble High Court of Madras in the case Commissioner, Madurai vs. Strategic Engineering Pvt. Ltd. reported in 2014 (310) ELT 509 has held "10. In fact, this Court has perused the entire decision reported in 2012 (26) S.T.R. 204 (Karnataka) (Commissioner of Central Excise & S.T., Bangalore v. Bill Forge Private Limited) and ultimately found that mere taken of CENVAT credit facilities is not at all sufficient for claiming of interest as well as penalty.
11. It is an admitted fact that Rule 14 of the Cenvat Credit Rules as been subsequently amended, wherein it has been clearly stated as "taken and utilised". Therefore, it is quite clear that mere taking itself would not compel the assessee to pay interest as well as penalty. Further, as pointed out earlier, the subsequent amendment has given befitting answer to all doubts existed earlier. Since, the subsequent amendment has cleared all doubts existed earlier in respect of Rule 14 of the said Rules, it is needless to say that the argument advanced by the learned counsel appearing for the appellant/Department is erroneous, whereas the argument advanced on the 6 ST/51014/2018-ST [SM] side of the respondent is really having merit and the substantial questions of law settled in the present Civil Miscellaneous Appeal are not having substance and altogether the present Civil Miscellaneous Appeal deserves to be dismissed."
9. In view of entire above discussion and keeping in view the previous decisions of this Tribunal court, as impressed upon by the appellant in the appellant‟s own appeal bearing No. ST/50483 dated 04.04.2018 & in the Appeal No. 50613 dated 11.04.2018. The order under challenge is held to have ignored the subsequent amendment and even the prior decisions. The Civil appeal of Hon‟ble Apex Court as has been relied upon is observed to have the findings limited to the use of word „or‟ / „and‟ (pre/post amendment in Rule 14) which is not the subject matter of the controversy here. Resultantly, the order under challenge confirming the demand of interest on the credit reversed is hereby set aside. Appeal stands allowed.
[Dictated and pronounced in the Open Court] (RACHNA GUPTA) MEMBER (JUDICIAL) Anita