2014 (11) TMI 249 - AT - Service Tax

Waiver of penalty - Delayed payment of service tax - service tax paid before issuance of SCN - Held that - it is observed that appellants have clearly admitted in their of submissions that amount was paid as pointed out by the audit. This fact itself does not prove their bonafide that they have deposited the amount before the issue of Show Cause Notice suo moto. - penalties are rightly leviable on the appellants. Availment of Cenvat Credit - Availment of credit on furniture - Held that - table, chair, stool, cot etc. were of the same genre and were in the nature of office furniture and were not eligible for availment of Cenvat Credit - Decided against assessee.

Summary

Issues:
1. Recovery of duty short paid/non-paid and imposition of penalty
2. Wrong availment of Cenvat Credit on furniture items

Analysis:

*Issue 1: Recovery of duty short paid/non-paid and imposition of penalty*

The appellant appealed against the Order-in-Appeal regarding the recovery of duty short paid/non-paid amounting to Rs. 1,00,844 and subsequent imposition of penalty. The appellant contended that since they had already paid the service tax amount before the Show Cause Notice was issued, they should not be penalized. The counsel argued that the delayed payment was inadvertent and requested a waiver of the penalty based on bonafide intentions. However, it was acknowledged that the amount was paid only after being highlighted by the Audit. The appellant emphasized that the penalty should be waived due to their bonafide actions. The Departmental Representative (DR) supported the Order of the Commissioner (Appeals) stating that the penalty was rightly leviable as the amount was paid only after the Audit pointed it out.

*Issue 2: Wrong availment of Cenvat Credit on furniture items*

The second issue revolved around the wrongful availment of Cenvat Credit amounting to Rs. 37,077 on cots and tables. The appellant argued that these items were taken on rent, and the rental charges, including service tax, were paid by them. However, the Commissioner upheld the findings of the Adjudicating Authority, stating that the credit on cots and tables could not be considered as credit on capital goods essential for providing recruitment services. The Commissioner reasoned that cots and tables were primarily for sleeping and resting, not for providing services. The Commissioner's Order-in-Appeal elaborately analyzed the issue, concluding that furniture items like tables, chairs, stools, and cots were not eligible for Cenvat Credit. The Tribunal concurred with the Commissioner's findings, rejecting the appeal of the appellant based on the inadmissibility of Cenvat Credit on such furniture items.

In conclusion, the Tribunal upheld the penalties imposed on the appellant for the recovery of duty short paid/non-paid and rejected the appeal concerning the wrongful availment of Cenvat Credit on furniture items, emphasizing that such items were not eligible for credit.