2016 (4) TMI 730 - AT - Service Tax

Whether penalty imposed is justified or the same is required to be enhanced - Rule 15 (2) of CCR, 2004 - Held that - no special reasons have been given for proposing higher penalty upon BSNL. Even the grounds of appeal filed before this bench also do not disclose as to why higher penalty is required to be imposed and to what extent. On the contrary, first appellate authority has given reasons to uphold penalty to the extent of ₹ 10,000/- only. Accordingly, bench is of the view that there is no justification to interfere with the order passed by the first appellate authority. - Decided against the revenue

Summary

Issues:
1. Justification of penalty imposed by the Adjudicating authority and upheld by the first appellate authority.

Analysis:
The appeal before the Appellate Tribunal CESTAT Kolkata was filed by the Revenue challenging the Order-in-Appeal passed by the Commissioner (Appeals), Customs & Central Excise, Guwahati. The Revenue contended that during an audit of BSNL for the period 2007 to December 2008, discrepancies were found, including non-payment of interest and wrongful Cenvat credit taken by BSNL. The Adjudicating authority confirmed the amounts and imposed a penalty of &8377; 10,000 under Rule 15(2) of the Cenvat Credit Rules, 2004. The Revenue argued that the penalty should have been higher. On the other hand, BSNL, represented by a Consultant, defended the Order-in-Appeal, stating that the penalty was justified as upheld by the first appellate authority.

Upon hearing both sides and examining the case records, the key issue before the Tribunal was whether the penalty of &8377; 10,000 imposed on BSNL was justified or if it needed to be enhanced. The Tribunal noted the observations made by the first appellate authority while upholding the penalty. The first appellate authority justified the penalty of &8377; 10,000 under Rule 15(1) of the Cenvat Credit Rules, 2004, for the wrongful availing of Cenvat credit. The Tribunal observed that the grounds for proposing a higher penalty were not adequately supported in the show cause notice or the appeal filed before the bench. The first appellate authority's reasoning for maintaining the penalty at &8377; 10,000 was found to be sufficient, and thus, the Tribunal concluded that there was no justification to interfere with the order of the first appellate authority.

Consequently, the Tribunal dismissed the appeal filed by the Revenue, affirming the penalty of &8377; 10,000 imposed on BSNL. The decision was based on the lack of substantial reasons presented by the Revenue to warrant an increase in the penalty amount, as the first appellate authority's rationale for the penalty was deemed appropriate and legally sound.