2013 (2) TMI 214 - AT - Service Tax

Stay Petition - Utilization of CENVAT credit without having balance Penalty - Section 80 of the Finance Act, 1994 Held that - Conduct of the appellant does not reflect to be fair when public money was enjoyed without credit being available on record therefore penalty shall be levied. Penalty is reduced to 25% of tax element which shall be payable within 30 days. Stay denied

Summary

Issues:
1. Utilization of Cenvat credit without sufficient balance.
2. Reduction of penalty under Section 80 of the Finance Act, 1994.

Analysis:
1. The appellant, represented by a Chartered Accountant, admitted to utilizing Cenvat credit without maintaining a balance over and above the amount during the material period. The tax demand related to this has already been paid, and the appellant is willing to deposit the interest as well. The appellant requested a reduction in the penalty since the use of Cenvat credit was only for a period of 6 months. The appellant sought a concession to serve this purpose. The learned authority noted the admission of liability by the appellant, which was undisputed. Consequently, the demand in adjudication was confirmed, leading to the imposition of interest. The issue of penalty remained, and although the appellant's conduct was deemed unfair for enjoying public money without the credit being available on record, the penalty was reduced to 25% of the tax element. The appellant was directed to pay this reduced penalty within 30 days of receiving the order, with a warning that failure to do so would result in the payment of the entire penalty imposed during adjudication.

2. The learned authority considered the appellant's prayer for a reduction in penalty under Section 80 of the Finance Act, 1994. Despite the appellant's request, the authority found the appellant's conduct questionable for utilizing public funds without the necessary credit balance. However, in an effort to resolve the dispute, the penalty was reduced to 25% of the tax element. The appellant was instructed to pay this reduced penalty within 30 days of receiving the order. Failure to comply would result in the appellant being liable to pay the full penalty imposed during adjudication. The appeal was disposed of accordingly, with the stay application being dismissed in light of the order.

This detailed analysis of the judgment highlights the issues related to the utilization of Cenvat credit without sufficient balance and the subsequent reduction of the penalty under Section 80 of the Finance Act, 1994.