2010 (8) TMI 733 - AT - Service Tax

Waiver of penalty - appellants had availed CENVAT credit in respect of GTA and legal and professional charges - duty along with the interest has been paid by the appellants without any protest during the course of investigation and same has not been challenged - appellants submitted that the provisions of Central Excise Act, 1944 are not invocable in this case as CENVAT credit has been taken against input service and Section 83 of the Finance Act deals with the same. The appellants are also submitted that if at all it is applicable of the provision of Section 11A(2B) of Central Excise Act, when they have paid the duty liability of their own only on the basis of duty ascertained by a Central Excise officer and on such amount no penalty is leviable Held that - penalty waived as the appellant is paid the duty of their own and they have not challenged the same. The waiver of penalty will not affect the duty demand in the facts and circumstances of this case, appeal is disposed of.

Summary

Issues:
Prayer for waiver of penalty denial based on availing CENVAT credit for GTA and legal charges. Appellants engaged in manufacturing soap, soap noodles, and vanaspati. Availed CENVAT credit on freight charges and legal charges. Failure to maintain separate accounts for dutiable and exempted goods/services. Show-cause notice for reversal of CENVAT credit, interest, and penalty imposition. Appeal for waiver of penalty denied by Commissioner (Appeals). Challenge against duty demand at the final hearing. Appellant's argument on the applicability of Central Excise Act and Finance Act.

Analysis:
The case involved an appeal by M/s. Wipro Ltd. against the denial of the prayer for waiver of penalty due to availing CENVAT credit for Goods Transport Agency (GTA) and legal charges. The appellants were manufacturing soap, soap noodles, and vanaspati, with duty payable on soap and soap noodles but exemption for vanaspati. They availed CENVAT credit on freight charges for raw material transportation and legal charges without maintaining separate accounts as required by Rule 6(2) of CENVAT Credit Rules, 2004. A show-cause notice was issued for the reversal of CENVAT credit, interest, and penalty imposition under Section 11AC of the Central Excise Act, 1944.

During the investigation, the appellants paid the duty and interest without protest, but the penalty was imposed by the adjudicating authority. The Commissioner (Appeals) confirmed the penalty, leading to the appeal before the Appellate Tribunal. The appellants argued that the provisions of the Central Excise Act were not applicable as CENVAT credit was taken against input services, invoking Section 83 of the Finance Act instead. They also contended that under Section 11A(2B) of the Central Excise Act, no penalty is leviable when the duty is paid voluntarily based on the duty ascertained by a Central Excise officer.

The Tribunal noted that the appellants challenged only the penalty before the lower appellate authority and did not contest the duty payment. Considering the circumstances, the Tribunal waived the penalty as the duty was paid voluntarily by the appellants. The waiver of penalty did not affect the duty demand. The Tribunal disposed of the appeal based on these observations, emphasizing that the waiver of penalty was justified given the appellants' compliance with duty payment and lack of challenge against it.

In conclusion, the Tribunal upheld the waiver of penalty, emphasizing the appellants' voluntary payment of duty and lack of challenge against it, while also addressing the arguments regarding the applicability of the Central Excise Act and Finance Act in the context of CENVAT credit availed on input services.