2012 (7) TMI 2 - AT - Central Excise

Ineligible CENVAT Credit challenged by the appellant of the Service Tax paid by the service provider - Stay Petition for waiver of pre-deposit of penalties - Held that - Having reversed the ineligible availmaint of the CENVAT Credit on being pointed out by the Audit party, the appellant has shown their bonafide on admitting the error. In view of this the imposition of penalty on the appellant is liable to be set aside - in favour of assessee.

Summary

Issues Involved:
1. Stay petition for waiver of pre-deposit of penalties
2. Disposal of appeal without pre-deposit
3. Ineligibility of CENVAT Credit for Service Tax
4. Reversal of inadmissible credit and payment of interest
5. Allegation of malafide in availing excess credit
6. Setting aside penalty imposition
7. Interest liability

Issue 1: Stay petition for waiver of pre-deposit of penalties
The Stay Petition was filed for the waiver of pre-deposit of penalties imposed by the adjudicating authority and upheld by the first appellate authority. The Tribunal found that the appeal itself could be disposed of without the need for pre-deposit, and thus, proceeded to take up the appeal for disposal after allowing the Stay Petition.

Issue 2: Ineligibility of CENVAT Credit for Service Tax
The main issue in this case revolved around the appellant's availing of an ineligible CENVAT Credit for Service Tax paid by the service provider. The appellant had mistakenly availed a credit of Rs.50,239 instead of the actual Service Tax paid amount of Rs.5,704. The appellant reversed the inadmissible credit upon being pointed out by the Audit party, showing their bonafide in admitting the error. The Tribunal noted that the Show Cause Notice did not allege any malafide intent on the appellant's part for availing the excess credit. Therefore, the Tribunal set aside the penalty imposed on the appellant.

Issue 3: Reversal of inadmissible credit and payment of interest
The appellant reversed the ineligibly availed CENVAT Credit upon being notified of the error by the Audit party. Although the interest on the inadmissible credit was not initially paid, the appellant later paid the interest as well. The Tribunal decided not to interfere with the first appellate authority's order regarding interest liability, as the appellant had already settled the interest amount.

Conclusion:
The Tribunal disposed of the appeal by setting aside the penalty imposition on the appellant for availing an ineligible CENVAT Credit, while maintaining the interest liability already paid by the appellant. The judgment highlighted the importance of bonafide actions by the appellant in rectifying inadvertent errors and the absence of any malafide intent in the case.