MODERN PETROFILS Vs. COMMISSIONER OF C. EX., VADODARA

JUDGEMENT

(1.) MODERN Petrofils (respondent) is engaged in the manufacture of polyester filament yarn. The appellant availed credit of service tax amounting to Rs. 1,37,618/ - during the period October 2005 to March 2006 on the basis of invoices which were not in the name of their factory. In the impugned order Commissioner (Appeals) has held that this was only a procedural omission and therefore the credit taken by the appellant was in order. On this ground as well as on the ground of limitation, he has dropped the demand and also set aside the penalty under Rule 15(3) of the Cenvat Credit Rules, 2004 read with Section 11AC of Central Excise Act, 1944 but has imposed a penalty of Rs. 10,000/ - under Rule 15(1) of Cenvat Credit Rules, 2004. Revenue is in appeal against the decision of the Commissioner dropping the demand and appellant is in appeal against the decision of the Commissioner imposing penalty of Rs. 10,000/ -.

(2.) LEARNED DR on behalf of the Revenue submitted that the Commissioner (Appeals) has relied upon the decision of the Tribunal in the case of CCE Vapi v. DNH Spinners reported in 2009 -TIOL -1216 -(CESTAT -Ahd.) = 2009 (16) S.T.R. 418 (Tribunal) = 2009 (244) E.L.T. 65 (Tribunal) to support his decision that even if the invoice is in the name of head office, credit taken by the factory would be in order. It was submitted that the case of DNH Spinners cannot be considered as a precedent in this case in view of the fact that in the case of DNH Spinners there was only one factory whereas in the present case appellants have multiple factories. When there are multiple factories, if the invoice is received in the name of head office, the proper procedure to follow was to register the head office as a distributor of input service credit. Therefore the credit taken by the appellant was not at all admissible. In view of the fact that appellants did not disclose this fact to the department that credit has been taken on the basis of invoices which was not in the name of the factory, extended period had been rightly invoked and penalty had been correctly imposed.

(3.) THE learned advocate on behalf of the appellant submitted that having dropped the demand, the Commissioner should not have imposed penalty. He submits that the omission was only procedural and further in view of the fact that there was no allegation that input service was not received, there was no offence committed by the appellants. He also relied upon the decision of the Larger Bench in the case of Godrej Soaps v. CCE Mumbai reported in 2004 (174) E.L.T. 25 (Tri. - LB) to support the contention that once demand for duty is dropped, no penalty can be imposed.