2009 (9) TMI 266 - AT - Service Tax

Tribunal Upholds Waiver of Penalty for Inadvertent Cenvat Credit Error

The tribunal upheld the lower appellate authority's decision to waive the penalty on the respondent, who had inadvertently availed Cenvat credit due to ... Rent a cab services- Notification No. 9/2004-ST, dated 09.07.2004 amended by Notification No. 1/2006-ST, dated 1.03.2006- the assessee after coming to know that it was not entitled to avail the Cenvat credit after the Notification No. 1/2006-sT, dated 01.03.2006, itself had reversed cenvat credit availed and informed the department on 7.09.2006 but the SCN was issued on 11.12.2007 which was beyond the stipulated period of one year, so the demand was time barred. Moreover, there was no malafide intention of the assessee to avail the cenvat credit. In the light of the decision of Chandrapur Magnet Wires (P.) Ltd. v. Collector of CE 1996 (81) ELT 3 held that- the assessee was not liable for demand of interest and penalty, thus there is no merit in the appeal of the revenue. Issues:Appeal against penalty waiver, eligibility for abatement, availing Cenvat credit, time-barred demand.Analysis:1. The appeal was filed by the revenue against the order where the penalty on the respondent was waived by the lower appellate authority. The respondent also filed a Cross Objection.2. The respondent provided services under Rent-a-Cab category and availed 60% abatement on taxable service value as per Notifications. However, they availed Cenvat credit during a specific period, leading to a demand for tax on the gross value of taxable service. The respondent argued lack of awareness about legal changes and no intention to evade tax. The lower appellate authority relied on a Supreme Court decision and allowed the appeal.3. The revenue appealed the decision, arguing that the facts of this case differ from the precedent cited by the lower appellate authority. They contended that the availed Cenvat credit was utilized and then repaid, making the case distinct.4. The respondent, though absent, submitted that the credit was availed inadvertently due to lack of awareness about legal changes and was promptly repaid. They argued against liability for duty, interest, and penalty, citing the time-barred nature of the show-cause notice.5. The tribunal noted that the respondent reversed the Cenvat credit upon realizing their ineligibility, informing the department promptly. The show-cause notice issued later was beyond the statutory one-year limit, rendering the demand time-barred. The tribunal found no mala fide intent and upheld the lower appellate authority's decision based on both procedural and substantive grounds.6. Consequently, the tribunal rejected the revenue's appeal, finding no merit in their arguments. The Cross Objection filed by the respondent was also disposed of accordingly.