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2018 (8) TMI 1340 - AT - Service TaxPenalty under sub-rule (3) of Rule 15 of CENVAT Credit Rules, 2004 read with Section 78 of the Finance Act, 1994 - disallowance of CENVAT credit - it is contended that the ingredients contained in the above statutory provisions are not fulfilled for imposition of penalty on the appellant. Held that - The appellant had taken the stand that CENVAT credit inadvertently availed by it had not been utilised for payment of Service Tax - Since the appellant had sufficient balance in its CENVAT account during the disputed period, taking of excess credit and subsequent reversal thereof, cannot be interpreted to say that there was intention to defraud the Government Revenue. Imposition of penalty cannot be sustained - appeal allowed - decided in favor of appellant.
Issues: Imposition of penalty under sub-rule (3) of Rule 15 of CENVAT Credit Rules, 2004 read with Section 78 of the Finance Act, 1994.
In this judgment by the Appellate Tribunal CESTAT MUMBAI, the appellant did not contest the disallowance of CENVAT credit and the confirmed interest demand by the Department. However, the appellant argued against the imposition of penalty under sub-rule (3) of Rule 15 of CENVAT Credit Rules, 2004 read with Section 78 of the Finance Act, 1994. The appellant claimed that there was a sufficient balance in its CENVAT account during the period when excess credit was taken and subsequently reversed. The Tribunal noted that the appeal memorandum filed by the appellant stated that the excess CENVAT credit was not utilized for Service Tax payment. The Tribunal found that the impugned order did not address the availability of a sufficient balance in the CENVAT account during the disputed period. As the appellant had enough balance in the CENVAT account, the Tribunal concluded that there was no intention to defraud the Government Revenue. Therefore, the Tribunal held that the penalty imposed on the appellant could not be sustained under the circumstances of the case. Consequently, the impugned order upholding the penalty against the appellant was set aside, and the appeal was allowed.
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