Commissioner's decision upheld, penalty dropped for Cenvat credit error. No malafide intent found. Revenue appeal dismissed.

The judge upheld the decision of the Commissioner (Appeals) to drop the penalty imposed on the respondent for taking Cenvat credit of service tax paid under Manpower Recruitment Agency Service. The judge found no evidence of any malafide intention on the part of the respondent, noting the prompt rectification of the error and refund of the service tax amount. Consequently, the appeal filed by the Revenue was dismissed, affirming the Commissioner (Appeals)'s decision.

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Issues:
Appeal against dropped penalty by Commissioner (Appeals) on respondent for taking Cenvat credit of service tax paid under Manpower Recruitment Agency Service.

Analysis:
The judgment involves an appeal by the Revenue against an order where the penalty imposed on the respondent by the Adjudicating Authority was dropped by the Commissioner (Appeals). The respondent had paid service tax under Manpower Recruitment Agency Service, took credit in books, and later reversed it upon notification by the department. The Adjudicating Authority then imposed a penalty on the respondent, which was subsequently dropped by the Commissioner (Appeals) and challenged by the Revenue in the present appeal.

The ld. AR argued that as per Rule 9 of the CENVAT Credit Rules, 2004, the respondent was not entitled to take Cenvat credit of the service tax paid under the mentioned service category. The Adjudicating Authority imposed the penalty on the respondent based on this argument. However, upon review, it was observed that the respondent rectified the error promptly after being notified by the department. The respondent's immediate action upon notification, along with the fact that the service tax amount had already been refunded, indicated no malafide intention to claim inadmissible credit. Consequently, the Commissioner (Appeals) dropped the penalty against the respondent.

After considering the facts of the case and the arguments presented, the judge concluded that there was no evidence of any malafide intention on the part of the respondent to claim inadmissible credit. The immediate rectification of the error and the refund of the service tax amount supported the respondent's position. Therefore, the judge upheld the decision of the Commissioner (Appeals) to drop the penalty and dismissed the appeal filed by the Revenue, finding no fault in the impugned order.

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