2010 (12) TMI 552 - AT - Service Tax

Waiver of pre deposit - 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 - The appellant was entitled to Cenvat credit as has been granted by the learned Commissioner (Appeals), against which there is no appeal by the revenue - It would, therefore, be proper to waive the penalties imposed on the appellant. The appellant accordingly succeeds on the penalty aspect as aforesaid and partially succeeds on interest aspect to the extent indicated herein before - 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.

Condonation of Delay:
The appellant sought condonation of a one-day delay in filing the appeal, claiming it was neither deliberate nor mala fide. The counsel for the appellant requested the delay to be condoned, which was not opposed by the revenue. The delay was thus condoned, and the COD application was allowed.

Entitlement to Concession on Interest and Penalty:
The main issue revolved around whether the appellant was entitled to any concession on interest and penalty when Modvat credit was utilized against part of the demand, resulting in a balance demand with interest and penalties under sections 76 & 78 of the Finance Act, 1994. Upon verification of records by both sides, it was established that after adjusting the Modvat credit against the service tax demand, a balance demand of Rs. 27,407 remained for realization. Consequently, it was decided that interest would be levied on the unpaid service tax amount of Rs. 27,407. Regarding penalties, it was noted that there was no indication of any mala fide intent on the part of the appellant. Since the appellant was entitled to Cenvat credit as granted by the Commissioner (Appeals) without any appeal by the revenue, it was deemed unfair for the appellant to face undue hardship. Therefore, the penalties imposed on the appellant were waived, and the appellant succeeded on the penalty aspect. The appellant partially succeeded on the interest aspect, with interest to be recovered on the unpaid balance of Rs. 27,407. The appeal was disposed of accordingly, with the appellant succeeding on the penalty aspect and partially on the interest aspect.

This judgment from the Appellate Tribunal CESTAT, New Delhi, highlights the considerations of condoning a delay in filing an appeal and the entitlement to concessions on interest and penalties when Modvat credit is utilized against a demand. The decision emphasizes fairness towards small taxpayers and the absence of deliberate intent to cause loss to revenue in determining the waiver of penalties and the recovery of interest on the unpaid balance.