2013 (4) TMI 628 - AT - Service Tax

Incorrect utilization of Cenvat credit as per by revenue amount mentioned in the invoices have been corrected by the appellant himself to arrive at the new rate at the time of payment. The invoices issued by the service provider can be corrected only by the service provider and not by the appellant. Accordingly credit was disallowed and imposition penalty. Held that - On perusal of the record, It was found that there is enough balance available with the appellant and the excess utilisation seems to be an inadvertent error and the same has been made good by the appellant on their own by adjusting and debiting the amount in the Cenvat credit available with them. Subsequent scrutiny has resulted in issuance of SCN to the appellant and the same has been issued after three years. Since the credit was available with the appellant and the excess amount inadvertently utilised was debited in the very next month, though it happened twice, there was no intention to evade the service tax liability as the appellant has been regularly filing returns with the lower authorities. Thus, this is fit case, for invoking the provisions of Section 80 and set-aside the penalty imposed by the lower authorities. As regards the interest amount, it is his submission that the same may be calculated by the revenue and on being informed to the appellant, they will discharge the same in due course. Thus, the penalties imposed is set aside.

Issues:
1. Incorrect availing of excess Cenvat credit on invoices.
2. Disallowance of Cenvat credit under Section 73(1) of the Finance Act, 1994.
3. Imposition of penalty under Sections 75, 76, 77, and 78 of the Finance Act, 1994.
4. Appeal against the order reducing service tax liability and imposing penalties.
5. Barred by limitation issue.
6. Consideration of penalty under Section 76 and 78 of the Finance Act, 1994.
7. Availability of balance with the appellant and inadvertent error.
8. Invocation of Section 80 to set aside penalties imposed.

Analysis:
The appellant was engaged in providing taxable services and had availed excess Cenvat credit on invoices issued by a service provider, incorrectly correcting the original amount mentioned in the invoices at the time of payment. It was found that the appellant had utilized excess credit and not followed the provisions of Rule 6(3)(c), resulting in a disallowance of Cenvat credit and imposition of penalties under various sections of the Finance Act, 1994. The first appellate authority reduced the service tax liability but upheld the penalties, leading to the appeal before the Tribunal.

The appellant argued that the demand was based on excess Cenvat credit utilization, which was rectified in subsequent returns, and there was no intention to evade service tax. They also raised the issue of limitation regarding the show cause notice issued. The departmental representative supported the lower authorities' findings.

Upon careful consideration, the Tribunal focused on whether the penalties under Section 76 and 78 should be upheld. It was observed that the excess credit utilization was inadvertent, promptly rectified by the appellant, and there was no intent to evade tax, as evidenced by regular filing of returns. The Tribunal invoked Section 80 of the Finance Act, 1994, to set aside the penalties, considering the appellant's status as a PSU and their proactive rectification of the error.

The appellant further highlighted that the amount already reversed in their records was not considered by the lower authorities, requesting its appropriation against the confirmed demand. They also agreed to discharge any interest amount calculated by the revenue in due course.

In conclusion, the Tribunal set aside the penalties imposed under Sections 76 and 78 of the Finance Act, 1994, invoking Section 80 due to the inadvertent nature of the error, the appellant's prompt rectification, and lack of intent to evade tax.

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