2014 (9) TMI 989 - AT - Service Tax

Denial of CENVAT Credit - Imposition of penalty - Delayed payment of service tax - Held that - Regarding waiver of penalty on the deposit of Service Tax before the issue of show cause notice it is observed that appellants have clearly admitted in their submissions that amount was paid as pointed out by the audit. This fact itself does not prove their bona fide that they have deposited the amount before the issue of show cause notice suo motu. In view of these circumstances I agree with the findings recorded by the Commissioner (Appeals) that penalties are rightly leviable on the appellants. Regarding the second issue of availment of Cenvat credit on furniture items I have gone through the Order-in-Original passed by the Commissioner (Appeals) as recorded in Para 7 of his order wherein he has elaborately analyzed the issue and rightly concluded that table chair stool cot etc. were of the same genre and were in the nature of office furniture and were not eligible for availment of Cenvat credit. - No substance in the ground taken by the appellants - Decided against assessee.

Summary

Issues Involved: Recovery of duty short paid/non-paid & imposition of penalty, Wrong availment of Cenvat credit.

Analysis:

1. Recovery of duty short paid/non-paid & imposition of penalty:
- The appellant contested the penalty of Rs. 1,00,844, arguing that they had paid the Service Tax before the show cause notice was issued, requesting a waiver of the penalty on the grounds of bona fide and inadvertent delayed payments. However, it was acknowledged that the amount was deposited only after being pointed out by the Audit. The appellant sought no penalty based on bona fide actions.
- The Departmental Representative (DR) supported the order of the Commissioner (Appeals), stating that the appellant failed to prove bona fide since the amount was paid only after being highlighted by the Audit. The Tribunal found that the appellants' admission of payment after the Audit's notice did not establish bona fide actions, agreeing with the Commissioner (Appeals) that penalties were rightly leviable on the appellants.

2. Wrong availment of Cenvat credit:
- The issue involved the wrongful availment of Cenvat credit amounting to Rs. 37,077 on cots and tables. The Commissioner (Appeals) upheld the Adjudicating Authority's decision that the credit on cots and tables could not be considered as credit taken on capital goods essential for providing manpower recruitment services. The Commissioner's order highlighted that cots and tables are primarily used for sleeping and resting, not for providing services, thus not eligible for credit.
- The DR supported the Commissioner (Appeals) on the ineligibility of furniture items for credit. The Tribunal reviewed the Commissioner's order and agreed with the analysis, emphasizing that items like tables, chairs, stools, and cots were akin to office furniture and not eligible for Cenvat credit. The appeal was rejected based on the findings of the Commissioner (Appeals) regarding the nature of the furniture items and their inadmissibility for credit.

In conclusion, the Tribunal dismissed the appeal on both issues, upholding the penalties for the recovery of duty short paid/non-paid and supporting the decision on the wrongful availment of Cenvat credit on furniture items. The judgment emphasized the importance of establishing bona fide actions and the eligibility of items for credit under the relevant regulations.