2017 (10) TMI 1227 - AT - Service Tax

Rectification of mistake - both the Commissioners as well as the CESTAT has not passed any order with regard to the levy of penalty - Held that - Since there was no suppression or concealment on the part of the applicant, therefore the imposition of penalty is not justified. Moreover since the demand itself is not sustainable to a large extent, therefore there can be no case for imposition of penalty and therefore, I allow the application and hold that the appellants are not liable to penalty and the amount of penalty which is imposed in the Order-in-Original is dropped - ROM application allowed.

Summary

Issues:
Rectification of mistake apparent from the record in Final Order, Reduction of demand, Imposition of penalty, Eligibility for cenvat credit, Suppression or concealment, Justification for penalty imposition.

Analysis:
The judgment pertains to an application seeking rectification of a mistake apparent from the record in Final Order No. 21397/2016. Initially, a demand of &8377; 39,05,417/- was confirmed for irregular cenvat credit, along with a penalty of &8377; 10,00,000/-. Subsequently, after appeals, the demand was reduced to &8377; 2,86,830/-. However, no order was passed regarding the imposition of penalty by the Commissioners or the CESTAT.

The consultant for the applicant argued that since the Tribunal had substantially reduced the demand and found the applicant eligible for cenvat credit without any suppression or concealment, the imposition of penalty was unwarranted. The consultant contended that as the demand itself was not sustainable to a large extent, there was no basis for imposing a penalty. Consequently, the application was allowed, and it was held that the appellants were not liable for the penalty, leading to the dropping of the penalty amount imposed in the Order-in-Original.

In the absence of any order regarding the levy of penalty by the Commissioners or the CESTAT, the Tribunal, through this judgment, clarified that due to the substantial relief granted to the applicant and the lack of suppression or concealment, the imposition of a penalty was deemed unjustified. The decision highlighted the importance of assessing the sustainability of the demand in determining the necessity of imposing a penalty. Ultimately, the application was allowed, relieving the appellants of the penalty liability, thus concluding the matter in their favor.