2018 (7) TMI 1600 – CESTAT KOLKATA – TMI – CENVAT Credit – input services – rent-a-cab service – health insurance service – interior decorator service – denial on account of nexus – Held that:- The appellant had accepted that CENVAT Credit availed on services such as rent-a-cab service, health care service and interior decorator service were ineligible to be availed as CENVAT Credit – As stated by the appellant, when the Purchase Orders were issued from the Kolkata office, the invoices should have been addressed to the Kolkata office – the cenvat invoices should be verified and the matter should be decided accordingly.
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Penalty u/s 78 – Held that:- There is no material on record to establish fraud, collusion, willful misstatement or suppression of facts on the part of the appellant – penalty u/s 78 of the Finance Act is unwarranted and is set aside.
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The matter is remanded to the Adjudicating Authority for verification of the documents and to pass order in accordance with
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uct or output service of the appellant. It was further observed that the appellant had taken credit of ₹ 13,67,508/- on IT services and ₹ 15,656/- on Commercial Coaching and Training service on the basis of bills issued to M/s Lafarge India Ltd., Mumbai and therefore, the department concluded that such credit was not available to the appellant. Pursuant to the audit observations, the appellant paid ₹ 1,61,223/- along with interest of ₹ 75,486/-. On 21.04.2014, the appellant was issued a Show Cause Notice proposing recovery of CENVAT Credit availed to the tune of ₹ 15,44,387/- along with interest and penalty. The adjudicating authority confirmed the demand along with interest and appropriated the amount already paid by the appellant. A penalty of ₹ 15,44,387/- was also imposed under section 78(1) of the Finance Act read with Rule 15(1) of the Cenvat Credit Rules, 2004. On appeal, the Commissioner (Appeals) upheld the adjudication order. Hence, the pre
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r authorities. 4. Heard both sides and perused the appeal records. 5. On perusal of records, I find that the appellant had accepted that CENVAT Credit availed on services such as rent-a-cab service, health care service and interior decorator service were ineligible to be availed as CENVAT Credit. The Ld. Representative contended that due to the logistical convenience of the service providers, they addressed and submitted the invoices in the Mumbai office. As stated by the appellant, when the Purchase Orders were issued from the Kolkata office, the invoices should have been addressed to the Kolkata office. In this regard, the findings of the Commissioner (Appeals) are reproduced:- The concept of Input Service Distributor was introduced to create a reliable node in the process of transfer of CENVAT Credit keeping in view the logistic disadvantage of raising bills in favour of remote manufacturing/ service units of firms who had their corporate offices in big cities from where all the fin
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nd any merit in the submissions of the appellant. 6. In my considered view, the cenvat invoices should be verified and the matter should be decided accordingly. So far as penalty under section 78 of the Finance Act is concerned, the observation of the Hon ble Gujarat High Court at Ahmedabad in Commissioner of Central Excise vs. Dashion Ltd. [2016 (41) S.T.R. 884(Guj.)] has observed as under: 8. Coming to the question of penalty, right from the show cause notice stage till the final disposal of the show cause notice proceedings, we find little evidence to support the allegations of willful misstatement, suppression, fraud or collusion on the part of the assessee. In fact, perusal of the show cause notice would show that the entire basis of the Revenue was wrongfully availment of the credit. Mere wrongfully availment without element of mens rea and that too for the purpose of evading payment of duty would not be sufficient to impose penalty. The adjudicating authority, without any basis
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