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2016 (11) TMI 279 - AT - Service TaxDemand of duty along with interest and penalty - payment of duty utilising the balance of CENVAT credit - whether the Service Tax due on 5.11.2008 paid through Cenvat Credit which was earned during 30.11.2008 to 31.1.2009 is permissible in terms of Rule 3(4) of Cenvat Credit Rules, 2004? - the appellant paid the amount through Cenvat Credit on 30.11.2008, 31.12.2008 and 31.01.2009 whereas this amount was due on 5.11.2008 - Held that: - the fact is not under dispute that the service tax due in the month of November 2008 was discharged through Cenvat Credit earned during the period 30.11.2008 to 31.1.2009. Rule 3(4) of Cenvat Credit Rules, 2002 - From the proviso of above Rule, it can be seen that the service tax liability of a particular month if to be discharged from Cenvat account it can be paid only Cenvat credit availed and lying in balance on the last day of the month for which the service tax is due. In the present case the service tax of ₹ 12,57,365/- is due for the month of November 2008 whereas the same was paid from the Cenvat Credit earned from 30.11.2008 to 31.1.2009, which is not permitted as per the clear language of the proviso to Rule 3(4) of the Cenvat Credit Rules,2004 - the appellant was required to pay the dues of ₹ 12,57,365/- from cash and not from Cenvat account, however, since the appellant have discharged the service tax from the Cenvat account, I hold that the appellant shall deposit ₹ 12,57,365/- in cash and the same amount shall stand restored in their Cenvat account. In view of the facts and circumstances of the case, the appellant have undisputedly paid the service tax but from Cenvat account instead of cash there is no intention of evasion of tax. In any case, the Cenvat credit was available in the subsequent period and to that extent the cash payment of service tax, if any, shall stand reduced to this extent. The reliance placed by the appellant on the decision of Metal Temple Pvt. Ltd. Vs. Commissioner of Central Excise, Kolhapur [2015 (6) TMI 468 - CESTAT MUMBAI] not applicable as the judgment is on the issue of Rule 8(3A) of Central Excise Rules, 2002 and on the issue that whether the Cenvat Credit during the default period can be utilized for payment of duty on the current clearances. In the present case, the issue is not related to the current liability but it is related to the dues of the previous period and as per Rule 3(4) of Cenvat Credit Rules, 2004, the service tax of the previous period of November 2008 can be paid from the Cenvat credit balance available as of 30.11.2008 only. Therefore, the fact of the judgment relied upon and the facts of the present case are different. The appellants have shown reasonable cause for waiver of penalties under Section 80 of the Finance Act. I, therefore waive the penalties imposed under Section 76 & 77 of the Finance Act. Appeal disposed off - decided partly in favor of appellant.
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