Amnesty Scheme penalty relief was limited where service tax was timely paid but interest was paid after the cut-off date.

Partial compliance with an Amnesty Scheme did not justify full waiver of penalty where service tax was paid by the stipulated date but interest was paid later. Because the interest component was not discharged within the period required for complete scheme benefit, the appellant could not claim total exemption from penalty. The duty and interest demand was maintained, but the penalty was reduced to a nominal amount of Rs. 10,000/- in view of the delayed compliance.

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Issues: Whether the appellant was entitled to waiver or reduction of penalty under the Amnesty Scheme where service tax had been paid before the stipulated date but interest was paid later.

Analysis: The duty component had been discharged before the cut-off date, but the interest was not paid within the period required for full benefit under the Amnesty Scheme. In view of the partial compliance, the Scheme could not be applied in full to exempt the appellant from penalty altogether.

Conclusion: The penalty was reduced to Rs. 10,000/- while the demand of duty and interest was maintained.

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