2010 (10) TMI 130 - AT - Service Tax

Penalty - cenvat credit of excise duty availed by service provider appellant was under belief that Maruti Van that was purchased having suffered central excise duty for use in providing courier service entitles the appellant to avail Cenvat Credit of Central Excise duty paid on Maruti Van. - credit reversed after finding dealers invoice not disclosing excise duty payment - appeal pending merely disposing stay application when sufficient materials came to record - appellant already deposited penalty the balance demand of penalty is waived

Summary

Issues:
1. Applicability of Cenvat Credit on central excise duty paid on Maruti Van for courier service.
2. Waiver of pre-deposit and penalties under Cenvat Credit Rules, 2004.
3. Imposition of penalty under Section 76 of the Finance Act, 1994.
4. Application of Section 80 of the Finance Act, 1994 for mitigating penalties.
5. Verification of challans and modification of first appellate order.

Analysis:
1. The appellant believed they were entitled to Cenvat Credit on central excise duty paid for a Maruti Van used in courier service. However, upon realizing the invoice did not show the central excise duty element, they voluntarily paid the service tax liability, interest, and penalty. The appellant sought total waiver of pre-deposit and penalties under Rule 15(4) of Cenvat Credit Rules, 2004, as they acted in good faith.

2. The learned appellate authority waived the penalty under Rule 15(4) of Cenvat Credit Rules, 2004, acknowledging no penal provision existed at the material time. The Tribunal noted that no penalty was imposed under Section 78 of the Finance Act, 1994, hence no further penalty was warranted under Rule 15(4) of Cenvat Credit Rules, 2004.

3. Regarding the penalty under Section 76 of the Finance Act, 1994, the appellant's belief in claiming excise duty credit led to the penalty. However, the cooperative attitude of the appellant, evidenced by timely deposits, was considered. Section 80 of the Finance Act, 1994, was invoked to mitigate the penalty due to the appellant's genuine mistake and ignorance of the law.

4. The Tribunal recognized the appellant's lack of intent to engage in litigation and the genuine mistake made due to ignorance of the law. Consequently, the penalty under Section 76 of the Finance Act, 1994, was partially waived, considering the appellant's compliance and cooperative behavior.

5. The Tribunal partly allowed the appeal, disposing of the stay application. The order was subject to verification of the challans provided by the appellant to the adjudicating authority. The modification of the first appellate order was based on the appellant's demonstrated cooperation and compliance with the law.

This comprehensive analysis of the judgment covers the issues related to the applicability of Cenvat Credit, waiver of penalties, application of relevant sections of the Finance Act, and the verification of challans for the modification of the appellate order.