2010 (12) TMI 122 - AT - Service Tax

Waiver or Penalty - Whether the appellant is entitled to any concession on interest and penalty when Modvat credit was allowed against part of the demand resulting in balance demand along with interest and penalty - Consequently, the appellate order in respect of levy of interest is modified holding that interest is to be recovered on unpaid balance of Rs. 27,407 - This clearly demonstrates that small tax payer should not face undue hardship for no deliberate intention of causing loss to Revenue - It would, therefore, be proper to waive the penalties imposed on the appellant - Appeal is disposed of

Summary

Issues:
1. Condonation of delay in filing the appeal.
2. Entitlement to concession on interest and penalty when Modvat credit was allowed against part of the demand.

Issue 1: Condonation of Delay
The counsel for the appellant requested condonation of a one-day delay in filing the appeal, emphasizing that the delay was neither deliberate nor malafide. Both parties agreed to the disposal of the appeal without pre-deposit. The Revenue did not object to the condonation of delay, leading to the allowance of the COD application.

Issue 2: Entitlement to Concession on Interest and Penalty
The main dispute revolved around whether the appellant was entitled to any concession on interest and penalty when Modvat credit was utilized against part of the demand, leaving a balance demand along with interest and penalty. The record confirmed that after adjusting the Modvat credit against the service tax demand, a balance demand of Rs. 27,407/- remained. Consequently, the appellant was liable to pay interest on the unpaid service tax amount. The appellate order was modified to reflect that interest should be levied on the outstanding balance of Rs. 27,407/-.

Regarding the penalties under Section 76 & 78 of the Finance Act, 1994, it was noted that there was no evidence of malafide intent on the part of the appellant. The appellant had been granted Cenvat credit by the Commissioner (Appeals), and there was no appeal by the Revenue against this decision. This lack of malafide intent and the fact that the appellant was a small taxpayer entitled to relief from undue hardship led to the decision to waive the penalties imposed on the appellant. Consequently, the appellant succeeded in the penalty aspect and partially in the interest aspect, with the appeal being disposed of accordingly.

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