Tribunal allows appeal citing clerical error in duty demand, sets aside penalty under Finance Act

The Tribunal allowed the appeal filed by M/s Amardeep Construction against the demand of duty under the Finance Act, citing a clerical error in availing Cenvat Credit which was rectified within the stipulated period. The Tribunal found merit in the appellant's argument and set aside the penalty under Section 78 of the Finance Act. The Revenue's appeal against the penalty imposition was dismissed as the demand and duty no longer stood. The judgment was delivered on 06.09.2018 by the Tribunal comprising HON'BLE MR. RAMESH NAIR, MEMBER (JUDICIAL) and HON'BLE MR. RAJU, MEMBER (TECHNICAL).

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Issues:
Appeal against demand of duty and penalty under Section 78 of the Finance Act.

Analysis:
The appeal was filed by M/s Amardeep Construction and Revenue against the order of the Commissioner (Appeals) confirming the demand of duty but setting aside the penalty under Section 78 of the Finance Act. M/s Amardeep Construction argued that a clerical mistake led to availing Cenvat Credit in January 2007, which was rectified by filing a revised return within 30 days and paying the differential duty along with interest. The argument was supported by citing relevant Tribunal decisions. The Revenue contended that reversal of credit does not negate the fact that it was initially availed, and the appellant cannot benefit from the notification after availing Cenvat Credit.

The Tribunal observed that no Cenvat Credit was availed in several months except for January 2007, which was claimed to be a clerical error. Rule 7B of the Service Tax Rule, 1994 was cited, providing an option to rectify such errors. The Tribunal noted that the appellant rectified the mistake by filing a revised return within the stipulated period under Rule 7B, which superseded the original return. Therefore, the Tribunal found merit in M/s Amardeep Construction's argument and allowed their appeal.

Regarding the penalty under Section 78 of the Finance Act, since the demand and duty no longer stood following the decision on the appeal, the Tribunal dismissed the Revenue's appeal against the imposition of the penalty. The judgment was pronounced on 06.09.2018 by the Tribunal comprising HON’BLE MR. RAMESH NAIR, MEMBER (JUDICIAL) and HON’BLE MR. RAJU, MEMBER (TECHNICAL). The legal representatives for both parties were Shri. Paresh Sheth (Adv) for the Appellant and Shri. K.J.Kinariwala (AR) for the Respondent.

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