CENVAT credit re-credit permitted on cash payment of service tax, and penalty waived where the dispute was only about payment mode.

The dispute concerned the mode of discharging service tax liability through cash payment after earlier utilisation of CENVAT credit, and re-credit of the amount already used was permitted because the taxpayer accepted payment by cash. Penalty was waived because the issue related only to the method of payment and the amount involved was small. The appellant was therefore allowed to pay the tax in cash and restore the corresponding CENVAT credit.

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Issues: Whether the service tax amount paid through CENVAT credit could be made good by cash with corresponding re-credit of the amount earlier utilised, and whether penalty was liable to be waived.

Analysis: The dispute concerned only the manner of discharge of the service tax liability. As the appellant accepted liability to pay the amount by cash, there was no objection to permitting re-credit of the amount earlier paid through utilisation of CENVAT credit. In view of the small amount involved and the nature of the payment issue, penalty was not warranted.

Conclusion: The appellant was permitted to pay the impugned amount by cash and take re-credit of the amount paid through CENVAT credit, and the penalty was waived.

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