2014 (12) TMI 289 - AT - Service Tax

CENVAT Credit - Business Auxiliary Services - Capital goods - Held that - Entire goods covered under the invoices have been issued to Head Office have been received in Unit-II. There is also no dispute that each invoice bears an endorsement, that the packed machines were sent to Unit -II. Thus, the conditions prescribed for availment of Cenvat Credit by a factory on the basis of the invoices issued to the Head Office as mentioned in the Board s Circular No.211/45/96/CX dated 14.5.96 are satisfied. The Cenvat Credit demand of ₹ 2,41,060/- along with interest and penalty of equal amount imposed on the appellant is, therefore, not sustainable and is liable to be set aside. Levy of penalty - Held that - appellant themselves had presented their records to the Audit Officers in course of which the above mentioned short-payment or non-payment of duty/service tax had been detected, it cannot be said that the above mentioned short-payment/non-payment of duty/service tax was deliberate. In fact the disputed amounts had been paid before the issue of SCN and therefore the same have to be treated as the payment of central excise duty/service tax made under Section 11 A(2B) of the Central Excise Act, 1944/section 73(3) of the Finance Act, 1994 and since the entire disputed amount of duty/service tax has been paid along with interest, even the show cause notice should not have been issued. In view of these circumstances, I hold that imposition of penalty on the appellant was not called for and is liable to be set aside. duty /Cenvat credit/Service Tax demands along with interest are upheld, imposition of penalty is set aside - Decided in favour of assessee.

Summary

Issues:
- Disputed central excise duty, Cenvat Credit, and service tax demands along with penalty imposition.
- Validity of Cenvat Credit on capital goods received under invoices issued to Head Office.
- Imposition of penalty on the appellant for various non-payment instances.

Analysis:
1. Cenvat Credit on Capital Goods:
The appellant disputed a Cenvat Credit demand of Rs. 2,41,060 for capital goods received under invoices addressed to the Head Office. The appellant endorsed the invoices in favor of Unit-II, satisfying conditions per Circular No.211/45/96/CX. The tribunal found the demand unsustainable, setting it aside along with the equivalent penalty.

2. Imposition of Penalty:
The penalty imposition on the appellant for various non-payment instances was challenged. The tribunal noted that the appellant had paid the disputed amounts before the show cause notice issuance, indicating no deliberate intent to evade payment. As the appellant cooperated during the audit, presenting records voluntarily, the tribunal deemed the penalty imposition unnecessary. Therefore, the penalty was set aside for all instances, including non-payment of excise duty on scrap, short payment of differential duty, and non-payment of service tax on commissions.

3. Overall Decision:
The tribunal upheld the duty, Cenvat Credit, and service tax demands along with interest. However, it set aside the penalty imposition on the appellant for all instances except the Cenvat Credit demand related to capital goods. Consequently, the impugned order was modified to reflect these decisions, providing relief to the appellant in terms of penalty imposition.

This detailed analysis outlines the tribunal's assessment of the disputed demands and penalty imposition, emphasizing the appellant's compliance and the legal considerations surrounding Cenvat Credit and penalty imposition in the context of central excise duty regulations.