2015 (11) TMI 1182

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..... e is provided to employees by the lease finance company and assessee is not utilizing any input services as per Rule 2(l) of CCR 2004 either directly or indirectly in providing the output services. Hence credit not eligible. This culminated in the issue of show-cause notice demanding service tax along with interest and penalty. After the proceedings before the original authority and the learned Commissioner (Appeals), the cenvat credit has been denied and demanded with interest and penalty under Section 78 of Finance Act 1994 has been imposed. 2. Even though the matter has been listed only for considering waiver of pre-deposit and stay against recovery, after hearing both the sides for some time, I came to the conclusion that the matter i .....

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..... disallowed. This was the view taken by the Hon'ble High Court of Bombay in the case of CCE, Nagpur Vs. Ultratech Cement Ltd. reported in [2010 (260) E.L.T. 369 (Bom.)]. Paragraph 39 of the said decision is relevant and is reproduced below: "39. The Larger Bench of CESTAT in the case of GTC Industries Ltd. (supra) has also observed that the credit of service tax would be allowable to a manufacturer even in cases where the cost of the food is borne by the worker (see last para). That part of the observation made by the Larger Bench cannot be upheld, because, once the service tax is borne by the ultimate consumer of the service, namely the worker, the manufacturer cannot take credit of that part of the service tax which is borne by the cons .....

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..... wer authorities that assessee is not eligible for cenvat credit and the credit availed should be paid back with interest. 5. As regards penalty, the learned counsel would submit that the issue is a debatable one and two views are possible. The appellant entertained a bona fide belief that the practice followed by them is correct and availed the credit. Moreover having regard to the size of the appellant and amount of credit involved which is only Rs. 1,55,755/- (Rupees One Lakh Fifty Five Thousand Seven Hundred and Fifty Five only), it cannot be said that this was done with intention to evade service tax according to the learned counsel. I am inclined to agree with these submissions. Accordingly the penalty imposed under Section 78 is waiv .....

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