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2013 (12) TMI 853 - AT - Service TaxAvailment of CENVAT Credit - Penalty imposed u/s 11AC - Held that:- appellant is a manufacturer of P or P medicaments and discharging appropriate duty on the final products so manufactured. It is also undisputed that in order to diversify, they had proposed to enter into manufacturing of herbal products, for which they had engaged services of consultant for ascertaining the market requirement, research requirement, standardization of materials and preclinical studies; on receipt of such report from the consultant, they were deliberating on the question of expansion/diversification. During the interregnum, period till the decision was taken, appellant availed Cenvat credit of the service tax paid by such consultant as service provider. Having abandoned the plan of diversification in the manufacturing herbal products, the services rendered by the consultant on this specific products, credit of said service tax, would not be available to the appellant - appellant has no case of availing Cenvat credit of the service tax paid by the service provider. Penalty seems to be unwarranted as the appellant had an idea of diversification into manufacturing activity of herbal products. When they availed cenvat credit of the service tax paid on the services of the consultant, who was engaged for considering such an activity, they had an intention to start the activity of herbal products. They could have had a bona fide belief in availing the Cenvat credit on such a service tax. In view of this, I hold that the penalty imposed by the adjudicating authority under Rule 15 of the Cenvat Credit Rules, 2004 seems to be inconsistent as the said rules envisages imposition of penalty on the intention to avail wrong cenvat credit - Decided partly in favour of assessee.
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