Raju DECISION
Raju, Member (T)
1. This appeal has been filed by M/s. Ineos Styrolution (India) Ltd. against demand of reversal of cenvat credit, interest and imposition of penalty under section 78 of Finance Act read with Rule 15(2) of Cenvat Credit Rules, 2004.
1.1 The appellant are registered as input service distributor and have distributed cenvat credit to its manufacturing plants located at three different places by way of issuing ISD invoices. The appellant unit was audited by Central Excise Revenue Audit and auditors pointed out that the Nandesari Manufacturing Unit of the appellant had availed ineligible cenvat credit of service tax paid under Voluntary Compliance Encouragement Scheme 2013 (VCES). VCES was implemented to encourage people to disclose their service tax liability on which they had failed to pay service tax and benefit in the shape of waiver of interest and penalty, and immunity from prosecution was offered in return to the assessees declaring under VCES. The CERA Auditor observed that the appellant had not paid service tax on import of service (Corporate Cost Sharing Expenses) in the year 2012. Consequently, the show cause notice dated 11.10.2013 was issued to the appellant and the appellant opted for VCES and paid service tax of Rs. 1,80,29,207/- under VCES. After payment of service tax, the appellant availed cenvat credit of the said service tax paid under VCES 2013, in the ST-3 Returns for the period October 2014 to March 2015 filed on 24.04.2015. The said credit was distributed to various manufacturing plants by issuing ISD invoices. After pre show cause notice consultations, a show cause notice was issued to the appellant demanding reversal of cenvat credit taken by them invoking Rule 9(1)(bb) and (e) of Cenvat Credit Rules, 2004. The demand along with interest was confirmed by the original adjudicating authority. Penalty under Section 78 of the Finance Act 1994 read with Rule 15(2) of the Cenvat Credit Rules, 2004 was also imposed.
2. Learned Counsel for the appellant pointed out that Rule 9(1)(bb) is not applicable when credit of service tax is availed on the basis of supplementary invoices. He argued that the said rule does not apply to case of service tax paid under reverse charge mechanism as in the present case. Learned counsel further argued that the appellants are entitled to cenvat credit on the strength of challan prescribed under Rule 9(1)(e) which does not prescribe any condition mentioned in Rule 9(1)(bb). He relied on the following decisions:
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