COMMISSIONER OF CENTRAL EXCISE Vs. JAGATJIT INDUSTRIES LTD

JUDGEMENT

(1.) THIS is revenue's appeal against Order -in -appeal No. 861/CE/JAL/2008, dated 22 -12 -2008 by which the Commissioner (Appeals) has set aside the Order -in -original No. 1 -2/AC/J -II/ST/2008, dated 1 -7 -2008 passed by Assistant Commissioner, Central Excise, Jalandhar. The respondents are manufactures of excisable goods falling under Chapters 11, 19, 28, 34 and 48 of the Central Excise Tariff Act, 1985, for which they have Central Excise Registration. Beside this, they are also providing Management Consultant Service and 1PR services for which they have acquired service tax registration under Service Tax Rules, 1994. The respondent during the period from October, 2004 to September, 2005, paid service tax amounting to Rs. 12,36,670 (Rupees Twelve Lakhs Thirty Six Thousand Six Hundred Seventy) on Management Consultancy Service and Intellectual Property Service provided by them. Though this service tax was paid by the respondent as service provider on the output service provided by them they took its Cenvat credit during November, 2004 to October, 2005 period. When this irregularity was detected by the Departmental Officers in November, 2005, they reversed the entire amount. However, by that time, out of total credit of Rs. 12,36,670 they had utilized credit of Rs. 91,000 and the remaining credit was unutilized beside other credit. The Department first issued a show -cause notice dated 23 -2 -2007, wherein the interest of Rs. 8,000 on amount of Rs. 91,000 was demanded. Subsequently another show -cause notice dated 5 -10 -2007 was issued, wherein the Department demanded the interest on the entire amount of wrongly taken Cenvat credit, including the amount of Rs. 8,000 for which separate show -cause notice dated 23 -2 -2007 had been issued earlier. The second show -cause notice also sought imposition of penalty on the respondent under Sections 77 and 78 of the Finance Act, 1994. Thus, both the show -cause notices are for the demand of interest on wrongly taken Cenvat credit, which had already been returned in November, 2005. Both the show -cause notices were adjudicated by the Assistant Commissioner vide Order -in -original No. 1 -2/AC/J -II/ST/ 2008, dated 1 -7 -2008 by which, beside confirming the demand of interest, the Assistant Commissioner also confirmed the Cenvat credit demand of Rs. 91,000. The amount of credit which had been utilized and also imposed penalty of same amount under Section 78. The Assistant Commissioner also imposed penalty of Rs. 5,000 on the respondent under Section 77. On appeal against the Assistant Commissioner's order, the CCE (Appeals) vide the impugned Order -in -appeal No. 861/CE/JAL/2008 dated 22 -12 -2008, however, set aside the entire demand and penalty. The interest demand was set aside relying upon Hon'ble Punjab & Haryana High Court judgment in the case of CCE v. Maruti Udyog Ltd., 2007 (214) ELT 173 (Punj. & Har.). It is against this order of the Commissioner (Appeals) that the present appeal has been filed by the revenue.

(2.) HEARD both the sides.

(3.) IN view of the above discussion, while the impugned order is set aside only in respect of interest on the amount of Rs. 91,000 and in this regard, the Assistant Commissioner's order is restored, the rest of the impugned order is upheld. The appeal stands disposed of, as above.