2011 (8) TMI 894 - AT - Service Tax

Waiver of predeposit - Reversal of Cenvat credit - Voluntary payment of duty - Held that assessee did not have any intention to evade payment of duty and inadmissible credit taken on the ground of input short received excess credit than the duty paid input and CENVAT credit on the basis of the extra copy of the invoice is not due to the intention to evade payment of duty and is only a bona fide mistake and at the best it can be termed as procedural infringement and not misdeclaration or suppression of facts with intention to evade payment of duty - Appeal is allowed

Summary

Issues involved:
Waiver of predeposit of penalty under Section 11AC of CEA, 1944; Admissibility of CENVAT credit; Imposition of penalty for procedural infringement or intention to evade payment of duty.

Analysis:

Issue 1 - Waiver of predeposit of penalty under Section 11AC:
The appellant filed applications for waiver of predeposit of penalty imposed under Section 11AC of CEA, 1944. The Tribunal decided to hear the appeals without predeposit. The issue was common, so a common order was passed.

Issue 2 - Admissibility of CENVAT credit:
The appellant, a PSU, availed CENVAT credit wrongly during the financial year 2004-05 and from March 2007 to July 2007. The lower authorities imposed penalties under Section 11AC. The appellant contended that the availed credit was due to bona fide mistakes and interpretational errors, not intentional evasion of duty.

Issue 3 - Imposition of penalty for procedural infringement or intention to evade payment of duty:
The appellant argued that there was no intention to evade payment of duty, as they promptly reversed the inadmissible credit once it was pointed out. The department cited the UOI v. Rajasthan Spinning & Weaving Mills case to argue for the imposition of penalties equal to the duty determined. However, the appellant referenced the C.C.E. v. Geneva Fine Punch Enclosures Ltd. case to counter this argument, stating that penalties are not applicable if the duty is paid voluntarily and the cause of evasion is not mentioned in the show-cause notice.

The Tribunal analyzed the facts and found that the appellant had reversed the inadmissible credits promptly upon discovery. It concluded that there was no intention to evade duty, and the penalties were not justified. Referring to the decisions in Rajasthan Spinning & Weaving Mills and Geneva Fine Punch cases, the Tribunal held that the Commissioner's order was not sustainable in law and allowed the appeal, setting aside the penalties.

In conclusion, the Tribunal ruled in favor of the appellant, emphasizing that the penalties were not warranted as there was no intention to evade payment of duty, and the duty was paid voluntarily upon discovery of the errors.