Toyota Kirloskar Motors Pvt. Ltd. Vs Commissioner of Central Excise Large Taxpayer Unit (CESTAT Bangalore)
Material Facts
Toyota Kirloskar Motors Pvt. Ltd. (the appellant) manufactures Multi Utility Vehicles (MUV)/Passenger Cars and parts thereof falling under Chapter 87 of the Central Excise Tariff Act, 1985. During the period from April 2012 to March 2013, the appellant wrongly availed CENVAT Credit amounting to ₹1,21,22,026/- on duty paid for “Outdoor Catering Services.” Upon the issue being pointed out, the appellant debited the said amount.
Procedural History
A show-cause notice was issued on 01.05.2013 proposing to deny the wrongly availed credit, appropriate the amount already paid, and recover interest and penalty. The Commissioner of Central Excise and Service Tax, Bangalore, passed Order-in-Original No. BLR-LTUNT-000-COM-043-2014-15 dated 19.06.2014, confirming the demand, appropriating the paid amount with interest, and imposing an equivalent amount of penalty. The appellant filed the present appeal before CESTAT Bangalore challenging this adjudication order.
Legal Issues & Statutory Provisions
- Whether the appellant is liable to pay interest under Rule 14 of the Cenvat Credit Rules, 2004 on the inadmissible CENVAT Credit of ₹1,21,22,026/- availed on Outdoor Catering Services when the credit was not utilized.
- Whether equivalent penalty is imposable for wrong availing of CENVAT Credit on Outdoor Catering Services.
- Statutory provisions involved: Rule 2(l) and Rule 14 of the Cenvat Credit Rules, 2004; Sections 11A and 11AA of the Central Excise Act, 1985; Sections 73 and 75 of the Finance Act.
Parties’ Submissions
- Appellant’s Submissions: The advocate conceded the inadmissibility of CENVAT Credit on Outdoor Catering Services with effect from 01.04.2012 in view of prior rulings. However, it was submitted that penalty should be set aside as the issue involved legal interpretation. Regarding interest, the advocate argued that under Rule 14 of the Cenvat Credit Rules, 2004 as amended w.e.f. 01.04.2012, interest is leviable only if credit is both taken and utilized wrongly. The appellant had an unutilized CENVAT Credit balance of ₹47,97,91,888/- as of 31st March 2013, showing the availed credit was never utilized.
- Respondent’s Submissions: The Authorized Representative for the Revenue reiterated the findings of the Commissioner in the adjudication order.
Tribunal’s Observations, Findings & Final Decision
