2014 (2) TMI 615 - AT - Service Tax

Stay application - Waiver of pre-deposit - Improper availment of cenvat credit - Cenvat credit bill of entry on which actual duty paid was nil - Held that - appellant had reversed the cenvat credit which they have wrongly availed on being pointed out by the audit party. Subsequently they wrote a letter to the authorities stating that this was a clerical error due to which said credit was availed - there is no evidence of such non availment of the cenvat credit for discharge of duty liability. At the same time, it is the statement of the ld. counsel that in the letter they are specifically stating that this amount is discharged under Section 11A (2B) would mean that the interest may arise. The interest of liability is on the appellant needs to be considered from various angles. As regards the penalty, we find that the appellant has made out a prima facie case for the waiver of the equivalent amount of penalty imposed by the adjudicating authority on the ground that the appellant themselves have reversed the cenvat credit - Conditional stay granted.

Summary

Issues involved:
Improper availment of cenvat credit on bill of entry with nil actual duty paid.
Waiver of pre-deposit of interest and penalty imposed by the adjudicating authority.

Analysis:

The case before the Appellate Tribunal CESTAT Ahmedabad involved a stay petition seeking the waiver of pre-deposit of interest and penalty imposed by the adjudicating authority due to the improper availment of cenvat credit by the appellant on a bill of entry where the actual duty paid was nil. The Tribunal, comprising Mr. M.V. Ravindran and Mr. H.K. Thakur, JJ., heard both sides and perused the records to make a decision.

Upon reviewing the records, it was noted that the appellant had reversed the cenvat credit they wrongly availed after being alerted by the audit party. The appellant claimed that this erroneous availment was a clerical error and that they had not utilized the amount for discharging duty liability on their final product. However, the Tribunal found no evidence supporting the non-availment of the cenvat credit for duty liability discharge. The appellant's submission that the amount was discharged under Section 11A (2B) raised concerns about potential interest liability. Regarding the penalty, the Tribunal acknowledged the appellant's reversal of the credit as a prima facie case for waiving the penalty imposed by the adjudicating authority.

After deeper consideration, the Tribunal decided that the appellant should deposit a specified amount within a set period to proceed with the appeal. It directed the appellant to deposit Rs.7.5 lakhs within eight weeks and report compliance before the Deputy Registrar. Upon verification of compliance, the file would be presented before the bench for further orders. Subject to this initial compliance, the application for waiving pre-deposit of the remaining amounts was allowed, and recovery was stayed pending the appeal's disposal.

In conclusion, the Tribunal's decision balanced the interests of the appellant and the revenue authorities by imposing a deposit condition for the appeal to proceed while granting a waiver for the remaining amounts subject to compliance.