Penalty for PLA-to-Cenvat transfer rejected where no mala fides, tax evasion intent, or Revenue prejudice was shown.

Penalty under Rule 15 of the Cenvat Credit Rules, 2004 was held unsustainable where the assessee transferred an amount from the PLA account to the Cenvat credit account for discharge of service tax liability. The transfer caused no demonstrated prejudice to the Revenue, the amount had already been deposited into the treasury through the PLA, and there was no evidence of mala fides, intention to evade duty, or wilful contravention of law. In the absence of a knowing breach, penalty could not be justified, and relief was warranted in favour of the assessee.

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Issues: Whether penalty was sustainable for transfer of the amount from the PLA account to the Cenvat credit account for discharge of service tax liability.

Analysis: The transfer caused no shown prejudice to the Revenue, the amount had already been deposited into the treasury through the PLA, and no mala fides or knowing breach of law was established. In the absence of intention to evade duty or any wilful contravention of law, penalty could not be justified under Rule 15 of the Cenvat Credit Rules, 2004.

Conclusion: The penalty was not sustainable and relief was warranted in favour of the assessee.

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