M/S Garden Silk Mills Ltd vs Commissioner, Central Excise & Service ...

Appeal No.E/801/2012 [Arising out of OIA No.SSP/25/SRT-I/2012, dt.21/09/2012, passed by Commissioner (Appeals), Central Excise & Customs, Surat-I]

M/s Garden Silk Mills Ltd Appellant

Vs

Commissioner, Central Excise & Service Tax, Surat-I Respondent

Represented by:

For Appellant: Shri Willingdon Christian, Advocate For Respondent: Shri G. Jha, Authorised Representative

For approval and signature:

Honble Mr. H.K. Thakur, Member (Technical)

1. Whether Press Reporters may be allowed to see the No Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether their Lordships wish to see the fair copy of Seen the order?

4. Whether order is to be circulated to the Departmental Yes authorities?

CORAM:

HONBLE MR. H.K. THAKUR, MEMBER (TECHNICAL)

Date of Hearing/Decision:09.06.2015

Order No. A/10777 / 2015, dt.09.06.2015

Per: H.K. Thakur

This appeal has been filed by the Appellant against OIA No.SSP/25/SRT-I/2012, dt.21/09/2012 passed by the First Appellate Authority. Shri Willingdon Christian, learned Advocate on behalf of the Appellant argued that the issue involved in the present appeal is regarding demand of CENVAT Credit on GTA services availed by the Appellant from the place of removal. It was his case that the Larger Bench in the case of ABB Ltd Vs CCE & ST, Bangalore [2009 (15) STR 23 (Tri-LB)], held the credit to be admissible on GTA services from the place of removal as the transportation activity was considered to be an activity relating to business. This judgment of Larger Bench was reversed by Hon'ble Karnataka High Court in the case of CCE & ST Bangalore Vs ABB Ltd [2011 (23) STR 97 (Kar.)] in 2011, that Appellant was under the bonafide belief tht CENVAT Credit on GTA services was admissible upto the place of removal as per the prevailing rulings upto 2011. It was his case that the period involved in the present appeal is from October 2009 to July 2010 and the same was reversed on 16.10.2012. It was fairly admitted by the learned Advocate that interest with respect to in-admissible credit may be required to be paid by the Appellant.

2. The learned Advocate also argued that penalty imposed by the Adjudicating authority under Rule 15(4) of CENVAT Credit Rules 2004 read with Section 11AC of Central Excise Act, 1944 is not imposable as the Appellant was under the bonafide belief that CENVAT Credit is admissible on GTA services from the place of removal as per Larger Bench judgment delivered by CESTAT Bangalore in the case of ABB Ltd Vs CCE & ST Bangalore (supra).

3. Shri G. Jha, Authorised Representative appearing on behalf of the Revenue argued that CENVAT Credit and interest on GTA services upto the place of removal has been correctly confirmed against the Appellant in view of the case law of Market Systems Vs CCE & ST Vadodara-II [2014 (3) ECS (170) (Tri-Ahd)]. The learned Authorised Representative made the Bench go through Para 5 & 6 of this case law to argue that CENVAT Credit and interest is required to be paid by the Appellant in the present appeal also.

4. Heard both the sides and perused the case records. The appellant has already paid the entire CENVAT Credit demand on GTA services on 16.07.2012. During the course of hearing, the learned Advocate appearing on behalf of the Appellant fairly agreed that the interest on the irregularly taken credit may be payable. In view of the case law of Market Systems Ltd Vs CCE & ST Vadodara-II (supra), passed by the Bench, it is held that the interest on the in-admissible CENVAT Credit taken is payable by the Appellant.

5. So far as the imposition of penalty upon the Appellant under Rule 15(4) of CENVAT Credit Rules 2004 is concerned, it is observed that there was a favourable case law with the Appellant in the form of Larger Bench decision of the Tribunal of Bangalore in the case of ABB Ltd Vs CCE & ST Bangalore (supra) wherein it was held that the GTA services from the place of removal is admissible even after the date of amendment to CENVAT Credit Rules. This order passed by Larger Bench was set aside by Hon'ble Karnataka High Court only in the year 2011. Therefore, the Appellant had a bonafide belief that such CENVAT Credit taken is admissible. Accordingly, it is held that present case is not a fit case for imposition of penalty under Rule 15(4) of CENVAT Credit Rules 2004. The appeal filed by the Appellant to that extent is required to be allowed.

6. Based on the above observations and settled preposition of law, the appeal filed by the Appellant is allowed only to the extent of setting aside the penalty imposed under Rule 15(4) of CENVAT Credit Rules 2004.

(Dictated and pronounced in Court)

(H.K. Thakur) Member (Technical)

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