Excess Cenvat Credit Penalty sustained where credit exceeded the service tax burden under apportionment rules

Penalty for excess Cenvat credit was sustained where the recipient availed credit on the full service tax paid by the provider, although the apportionment under Notification No. 30/2012-ST required only 25% to be borne by the provider and 75% by the service recipient. The excess credit was reversed, but interest on the confirmed demand was not paid. The Tribunal also observed that the service provider could have claimed refund of the excess tax, and held that the cited precedents did not justify waiver of penalty on these facts. The appeal therefore failed.

---

---

Issues: Whether the appellant was entitled to deletion of the penalty imposed in relation to excess Cenvat credit availed against the service tax apportionment under Notification No. 30/2012-ST dated 20.06.2012.

Analysis: The appellant had availed Cenvat credit on the entire service tax paid by the service provider, though only 25% was to be borne by the provider and 75% by the service recipient under the notification. The excess credit was reversed, but the interest on the confirmed demand was not paid. The Tribunal also noted that the service provider could have sought refund of the excess tax paid, and that the cited precedents did not support waiver of penalty on these facts.

Conclusion: The penalty was upheld and the appeal failed.

---