2023 (12) TMI 1213 - AT - Service Tax

Levy of penalty - non discharge of tax liability - availment of irregular CENVAT Credit - suppression of facts or not - amount already reversed by the appellant was proposed to be appropriated against the said demand - HELD THAT - The present case is merely a case of non discharge of tax liability, same cannot be equivalent to an intentional and positive act to evade payment of duty. The onus to prove such an act is upon the department. There are no iota evidence proving any positive intentional act of the appellant to evade the duty. The appellant was regularly/claiming credit of duty paid on coal as their input i.e. coal was exempted till 1.3.2011. They continued availing said credit for subsequent few more months due to inadvertence or ignorance on the part of the appellant to take into consideration the amendment which came into effect on 1.3.2011 making coal as an excisable goods. Thus it is far a different situation than an intention to evade payment of duty. The tax returns were otherwise regularly undisputedly filed. There is also no demand of excise duty on the coal from the appellant which otherwise stands paid. This apparent fact makes it clear that there is no suppression of facts, nor any element of fraud, mis-statement on the part of the appellant. It is also observed that the amount which is ordered to have been appropriated was reversed much prior to issuance of SCN. The SCN should not have been issued in view of proviso to section 73 of the Finance Act, 1994. The order imposing equal penalty of Rs.46,21,582/-, is not sustainable and the order under challenge is set aside to that extent - Appeal allowed.

Summary

Issues involved:
The appeal challenges the Order-in-Original regarding the inadmissibility of Cenvat credit for services not received at the factory but at captive mines, leading to a demand for recovery of credit, interest, and penalty.

Facts and Arguments:
The appellant, engaged in manufacturing, availed Cenvat credit for services received by their captive mines. The department proposed recovery of inadmissible credit, leading to a show cause notice. The appellant contested the penalty imposition, citing a previous tribunal order in their favor and the timely reversal of the disputed amount. The department argued that the credit availment post-audit was in violation, emphasizing the potential loss to the government.

Judgment:
The Tribunal noted that a significant portion of the demand was confirmed and already reversed by the appellant. It observed no intentional evasion of duty, attributing the oversight to changes in excise duty on coal. The Tribunal referenced the appellant's compliance with tax filings and lack of evidence for fraud or suppression. Citing legal precedents, the Tribunal found the penalty imposition unsustainable and set it aside, upholding the appropriation of the reversed credit amount. Consequently, the appeal was allowed.

Separate Judgment:
The Hon'ble Dr. Rachna Gupta, Member (Judicial), delivered the judgment, setting aside the penalty imposition while upholding the appropriation of the reversed credit amount, allowing the appeal.