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2014 (8) TMI 624 - AT - Service TaxWaiver of pre deposit - CENVAT Credit - Penalty under Rule 15 - Held that:- Appellant intends to end the litigation with the department. It has already reversed the Cenvat credit to the extent indicated in adjudication order with deposit of interest of ₹ 49,401/- as is apparent from the said order. The crucial issue is only penalty that has been imposed under Rule 15(2) of Cenvat Credit Rules, 2004. Learned Adjudicating Authority invoked Section 11AC for imposition of penalty under Rule 15(2). When this sub-rule is read, that does not bring a case of service tax issue since the input and capital goods are coverage of that sub-section. When sub-section (3) has enacted, mechanism to deal with input services which was subject matter at page 8 of the adjudication order, there is no reference to Section 11AC in that sub-section. In absence of legislative intent to invoke Section 11AC for reading sub-section (3) the adjudication order is not sustainable insofar as penalty imposed under Rule 15(2) is concerned. Appropriate sub-section is sub-section (3). It is pertinent to mention that while sub-section (2) deals with element of Section 11AC, sub-section (4) mentions about element of Section 78 of the Finance Act, 1994 for no mechanism provided in sub-rule (3) to invoke Section 11AC of Central Excise Act, 1944, nor Section 78 of the Finance Act, 1994, levy of penalty of ₹ 10,000/- shall be justified in the fitness and circumstances of the case - Decided partly in favour of assessee.
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