M/s. HI TECH ARAI PVT. LTD. Versus COMMISSIONER OF GST AND CENTRAL EXCISE, MADURAI
Central Excise
2018 (10) TMI 824 – CESTAT CHENNAI – TMI
CESTAT CHENNAI – AT
Dated:- 5-10-2018
E/41553 to 41555/2018 – 42571-42573/2018
Central Excise
Smt. Sulekha Beevi C.S, Judicial Member
For the Appellant : Ms. G. Vardini Karthick, Adv.
For the Respondent : Shri L. Nandakumar, AC (AR)
ORDER
The appellants are engaged in manufacture of Oil Seals, Moulded Rubber Products etc., and are availing the facility of Cenvat credit of duty paid on inputs, capital goods and service tax paid on input services based the invoices issued by the head office, which is registered as an Input Service Distributor. During the course of audit of accounts of appellants, it was noticed that their head office had distributed input service credit in violation of provisions of Rule 7 of Cenvat Credit Rules, 2004. As such, excess credit was distributed by the head office to the five Units of appellant-Com
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enalty imposed cannot sustain. It is submitted by her that the period involved is Apr.'14 to Aug.'14. An amendment was brought forth by Notification No.21/04-CE (NT), dated 11.07.2014 so as to restrict the distribution of credit by head office on prorata basis. The period under dispute is a transition period and the appellants had distributed the credit on the bonafide belief that they are eligible for such distribution. She, therefore, pleaded to set aside the interest as well as penalties. It is also argued by her that in respect of two other Units by Order-in- Original No.68/17, dated 11.01.2018 and Order-in-Appeal No.215/17, dated 14.03.2018, the Commissioner (Appeals) had waived the penalties imposed.
3. The learned Authorised Representative Shri L. Nandakumar supported the findings in the impugned order. He submitted that the appellants by such method of distribution had availed excess credit.
Therefore, the demand raised is legal and proper. He also argued that the issue was u
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Further, it is also to be remembered that whatever amount was distributed as excess to the appellant's Unit resulted in equal reduction of credit passed on to the other Units of the appellant's-Company.
This wrong distribution was caused by incorrect computation of turnover of the respective Units, but the net effect of it is revenue-neutral.
Finally, I find that the appellant had accepted the mistake as soon as it was pointed out to them and reversed the excess credit in their ER-1 returns for December, 2015 and February, 2016 without even waiting for a show-cause notice. Further, proceedings with respect to interest have been dropped, as the appellant had sufficient unutilized credit. Considering the peculiar matrix of facts, change in law, cooperative conduct of the appellant and revenue-neutrality of the issue, I hold that the imposition of penalty under Rule 15 (2) of the Cenvat Credit is unjustified.”
7. Taking these aspects into consideration, I am of the view that applyin
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