2017 (10) TMI 82 – GUJARAT HIGH COURT – 2018 (8) G. S. T. L. 105 (Guj.) – Penalty – input credit on parts used for construction of fixed and semifixed structures – Held that: – When the assessee bonafide carrying a belief which cannot be stated to be wholly untenable that cenvat credit on such inputs was available, claimed the same with full knowledge of the department, merely because eventually such credit was disallowed, would not give rise to penalty proceedings – appeal dismissed – decided against Revenue. – TAX APPEAL NO. 761 of 2017 Dated:- 28-9-2017 – MR. AKIL KURESHI AND MR. BIREN VAISHNAV For The Appellant : Priyank P Lodha, Advocate ORAL ORDER (PER : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. Department is in appeal against the judgment of CESTAT dated 20.01.2017 raising following questions for our consideration: Whether in the facts and circumstances of the case and law, the Hon'ble Tribunal has committed substantial error of law in setting aside the penalty as being unwar
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e of 2014 (35) STR 865. The Tribunal by the impugned judgment confirmed the stand of the department that the cenvat credit was not available to the assessee. The Tribunal was of the opinion that the issue is squarely covered by the judgment of Bombay High Court in case of Bharti Airtel. The decision in case of Mundra Ports & Special Economic Zone Ltd. (supra) referred by this Court involved different facts. With respect to penalty however, the Tribunal was of the opinion that being a disputable and pure question of law, the penalty was not justified and accordingly deleted the same. It is this portion of the Tribunal's judgment that the department has challenged before us. 3. Having heard learned counsel for the department and having perused the documents on record, it emerges that the claim of the assessee for input credit on parts used for construction of fixed and semifixed structures was highly debatable one. The case of the department is that the assessee did not make prop
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redit in respect of input of capital goods wrongly or without taking reasonable steps to ensure that the appropriate duty on the said input or capital goods has been paid or contravene any of the provisions of the rules in respect of any input or capital goods then all such goods shall be liable to confiscation and the person would be liable to a penalty not exceeding the duty on the excisable goods in respect of which the contravention has been committed or ₹ 10,000/whichever is greater. 5. Under this rule therefore penalty could be imposed if a person takes a cenvat credit wrongly or without taking a reasonable steps to ensure that appropriate duty is paid. The reference to credit being wrongly taken or without taking reasonable steps would have an element of totally wrong or malicious claim. If the credit is claimed bonafide and the belief that such cenvat credit was available is a reasonable belief, penalty under the said rule would not be imposed. It is not compulsory to imp
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