Appellant's cenvat credit use deemed illegal in June 2017. Penalty waived due to no intent to evade duty.

The Tribunal held that the appellant's utilization of cenvat credit for duty payment in June 2017 was not legal. The appellant was directed to revise the return or claim a refund under the CGST Act, 2017. Regarding penalty under Section 78, as there was no intention to evade duty and it was considered a revenue-neutral situation, the penalty was set aside. The impugned order was modified accordingly, and the appeal was partly allowed.

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Issues involved:
The issue in this case revolves around the utilization of cenvat credit for payment of duty in relation to service tax liability under reverse charge mechanism for the month of June 2017, paid on 13.07.2017.

Summary of Judgment:

Issue 1: Utilization of cenvat credit for payment of duty:
The appellant had discharged the service tax liability under reverse charge mechanism for the month of June 2017 on 13.07.2017. The appellant claimed cenvat credit shown in the return of June 2017 and utilized it for payment of duty in the same month. The department contended that since the service tax was paid in July, the cenvat credit was not available as on 30.06.2017, hence could not have been adjusted towards the duty payment for June 2017. The Tribunal held that the appellant's utilization of cenvat credit for duty payment in June 2017 was not legal and correct. The appellant was directed to either revise the return to show the adjustment or claim a refund under Section 142(3) of the CGST Act, 2017.

Issue 2: Penalty under Section 78:
Regarding penalty, the Tribunal noted that there was no intention to evade duty as the service tax was paid and utilized, albeit incorrectly. It was considered a revenue-neutral situation as the appellant was entitled to a refund of the same amount. Therefore, in the absence of any mala fide intent, the penalty under Section 78 was set aside.

Conclusion:
The impugned order was modified to reflect the above decisions. The appeal was partly allowed in the specified terms.

This summary provides a detailed overview of the judgment, highlighting the key issues, arguments presented, and the Tribunal's decision on each aspect of the case.

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