2015 (11) TMI 1043 - AT - Service Tax

Levy of Penalty u/s 78 - Invocation of Section 80 - whatever was suggested by the audit party and reversed the cenvat credit taken along with interest - show cause notice was issued with the wrong name as M/s. Gland instead of the name of appellant - Held that - In the SCN it has been stated that M/s. Gland has not disclosed the details. Therefore the appellant could have easily contested this saying that if Gland has not disclosed the details how can appellant be liable to pay back the cenvat credit and interest and penalty. However the appellant has accepted it as a typographical error and this issue has never been raised. Apparently the appellant wanted to close the issue and do not enter into a litigation. Nevertheless litigation has been commenced by the Revenue and even while doing so in the case of a demand, the cut and paste procedure has been adopted resulting in a wrong name mentioned in the show-cause notice. - even the statutory provisions have not been considered and decisions cited have not been discussed. - this is a fit case for waiver of penalty under Section 80 of Finance Act 1994 and accordingly penalty imposed on the appellant are set aside. - Decided in favour of assessee.

Summary

Issues:
1. Irregular availment of cenvat credit on motor vehicles
2. Inadmissible cenvat credit on input services from abroad
3. Cenvat credit used for exempted services
4. Wrongly taken cenvat credit due to non-taxable output service
5. Demand for cenvat credit, interest, and penalty
6. Imposition of penalty under Rule 15(4) of Cenvat Credit Rules

Analysis:
1. The appellants, during an audit, acknowledged irregularities in cenvat credit availed on motor vehicles and reversed it. The counsel admitted the mistake, leading to prompt repayment.
2. Cenvat credit on input services from abroad was deemed inadmissible, although the appellant could have contested it. The credit was reversed voluntarily.
3. Cenvat credit used for exempted services was irregularly claimed, and the appellant accepted the mistake, repaying the amount with interest.
4. Wrongly availed cenvat credit due to non-taxable output service was acknowledged as a mistake by the appellant, leading to repayment with interest.
5. A show-cause notice was issued for demanding wrongly availed cenvat credit, interest, and penalty. The notice cited the appellant's irregular credit availing with an intention to evade tax, invoking Rule 14 of Cenvat Credit Rules and Section 73(1) of the Finance Act 1994.
6. The penalty was proposed under Rule 15(4) of Cenvat Credit Rules, with a reference to Section 78 of the Finance Act 1994. The original authority imposed the penalty despite the appellant's repayment and cited a Board Circular to justify the decision.
7. The appellate authority considered the appellant's lack of intention to evade tax, leading to the reversal of credit promptly. The penalty under Section 78 was set aside invoking Section 80 of the Finance Act 1994, as the appellant showed no intention to evade tax, despite procedural errors and lack of consideration of statutory provisions. The demands for cenvat credit and interest were upheld as uncontested.