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2021 (12) TMI 1426 - CESTAT MUMBAIAvailment of CENVAT credit without payment of service tax under reverse charge mechanism - Credit availed not utilised - interest also paid for availment of such irregular credit - penalty u/s 77 and 78 of FA - HELD THAT:- In some months, though the appellant had availed Cenvat credit without payment of service tax under reverse charge mechanism, but such irregularly availed credit was not utilized for payment of service tax and also the appellant had discharged the interest liability for availment of such irregular credit. Since, the appellant had compensated the government exchequer by way of payment of interest on the irregularly availed Cenvat credit for the disputed period, it cannot be said that they are liable for reversal of the entire Cenvat credit. Since the credit availed by the department had not been utilized for payment of service tax on the output service and the appellant had paid the interest amount to compensate the Government Revenue for taking of earlier Cenvat credit, the proceedings initiated for denial of the Cenvat benefit and the recovery of the same should not stand for judicial scrutiny. Levy of penalty under Section 78 - HELD THAT:- The ingredients mentioned in the statute namely, fraud, collusion, willful misstatement etc. are absent in the present case. Taking on irregular cenvat credit, payment of interest thereon and available cenvat credit in the books of accounts were within the knowledge of the department. Hence, invocation of Section 78 will not hold good for imposition of penalty on the appellant. Penalty imposed under Section 77 ibid - HELD THAT:- The penalty imposed under Section 77 ibid is justified in the circumstances of the present case. Further, the learned Advocate appearing for the appellant also fairly concedes that the case of the appellant is exposed to the penal consequences provided under Section 77 ibid. The impugned order, to the extent it upheld the recovery of Cenvat demand along with interest and imposition of penalty under Section 78 ibid is set aside and appeal to such extent is allowed in favour of the appellant.
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