2010 (12) TMI 328

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..... credit and the date of payment to the service provider, the appellants have enjoyed the monetary benefit and therefore the demand of interest for this period as held by the original authority deserves to be upheld - Denial of credit set aside while confirming Interest and penlty.
Shri M. Veeraiyan, J. REPRESENTED BY : Shri Atul Kumar Gupta, Advocate, for the Appellant. Shri Anil Khanna, SDR, for the Respondent. [Order]. - This is an appeal against order of the Commissioner (Appeals) No. 02/ST/DLH/2009 dated 27-1-09 by which the order of the original authority confirming the demand of duty by denying service tax credit amounting to Rs. 2,51,699/- and imposing penalty of Rs. 10,000/- was upheld. 2. Heard both sides. 3. The rele .....

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..... s, the mistake has been condoned and the credit has been made available. 5. Learned SDR drawing my attention to the provision of Rule 9(3) of Cenvat Credit Rules, 2004 during the relevant period submits that as recipient, they were required to take precautions as envisaged therein before taking credit. It is clear violation of legal provision of Rule 9 as they have taken credit without paying service charge and service tax to the service provider. As initially taking of credit itself is not legal, the payment of service charges and service tax subsequently cannot rectify the mistake and the credit taken has been rightly denied and duty demanded and penalty has imposed. 6. I have carefully considered the submissions from both sid .....

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..... hold that on subsequent payment of service charges and service tax to the provider of service, the appellants shall be eligible for the credit. During the interim period i.e. between the date of taking credit and the date of payment to the service provider, the appellants have enjoyed the monetary benefit and therefore the demand of interest for this period as held by the original authority deserves to be upheld. Further, the penalty of Rs. 10,000/- imposed on the appellants deserves to be upheld. 9. In view of the above, the appeal is disposed as follows :- (a) Denial of credit is set aside after taking into account that subsequently the appellants have paid service charges and service tax to the provider of service. (b) Interest for th .....

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