2010 (5) TMI 338 - AT - Service Tax

Penalty - Cenvat credit found to have been irregularly availed - assessee was not eligible to avail Cenvat credit of duty paid on inputs that went into produce capital goods in the form of immovable property such as storage tanks - The appeal is rejected as infructuous.

Summary

Issues:
1. Appeal seeking to vacate penalty under sections 76 and 78 of the Finance Act, 1994.
2. Eligibility of availing Cenvat credit on inputs used to produce capital goods.

Analysis:
1. The appellant filed an appeal seeking to vacate a penalty of Rs. 1,04,590 imposed under sections 76 and 78 of the Finance Act, 1994. The penalty was related to irregularly availed Cenvat credit of excise duty on steel and cement used in the erection of a storage tank. The original authority denied the credit and imposed penalties, which were sustained by the Commissioner (Appeals). However, the Tribunal, in Final Order No. 711/2010, dated 12-4-2010, allowed the appeal and set aside the impugned order, thereby vacating the penalties imposed.

2. The issue of eligibility to avail Cenvat credit on inputs used to produce capital goods, such as storage tanks, was raised by the revenue's representative. Referring to a Tribunal decision in another case, it was argued that the appellant was not eligible to avail Cenvat credit on inputs that went into producing immovable property like storage tanks. However, upon careful consideration of the case records and submissions, the Technical Member noted that the impugned order had already been vacated by a previous Tribunal decision. Consequently, the penalty imposed by the first appellate authority was also vacated. As a result, the appeal was deemed infructuous and rejected.

This judgment highlights the importance of adhering to Cenvat credit rules and regulations, especially concerning the eligibility of availing credits on inputs used in the production of capital goods. It also underscores the significance of Tribunal decisions in resolving disputes related to tax penalties and credit availment issues.