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2020 (10) TMI 155 - AT - Central ExciseAvailing cenvat credit against pre-deposit - to be considered as 'deposit of Service Tax or not' - amount pre-deposited by the appellant in terms of Section 35F of the Central Excise Act, 1944 pursuant to the stay order - HELD THAT:- Rule 3 ibid is the enabling provision, which entitles a manufacturer or a service provider to take Cenvat credit of various duties and service tax mentioned therein. The said rule nowhere prescribes that amount deposited under Section 35F ibid should be considered as either duty or service tax for the purpose of taking the Cenvat benefit. Since, payment made under 35F is not specifically finding any place in Rule 3 ibid, taking of such amount as Cenvat credit is contrary to such statutory provision and hence, denial of Cenvat benefit in the present case by the authorities below is in conformity with the statutory provisions - In view of the fact that Rule 3 of the rules does not consider the amount of pre-deposit as service tax for availment of Cenvat credit by the manufacturer/service provider, taking of such credit by the appellant is not proper and justified. Thus, the service tax demand confirmed by the original authority and upheld in the impugned order cannot be faulted with. The department has invoked the provisions of Section 11AC of the Central Excise Act, 1944 for imposing mandatory penalty on the appellant. Insofar as invocation of the said statutory provision is concerned, the department has to specifically allege and prove with substantial evidence that there is element of fraud, collusion, willful misstatement, suppression of facts etc., with intent to evade payment of central excise duty/service tax. From the averments made in the appeal memorandum as well as the submissions made by the learned Advocate at the time of hearing of appeal, it transpires that the ingredients mentioned in Section 11AC ibid are absent and as such, the provisions of Section 11AC ibid cannot be invoked inasmuch as taking of Cenvat credit of the pre-deposit amount in question by the appellant was not owing to the reason of fraud, collusion, willful misstatement etc. - the availment of credit based on the valid and proper document cannot invite for the penal consequences by reason of fraud, collusion etc., with intent to evade Government revenue. Imposition of penalty under Section 11AC ibid by the department cannot stand for judicial scrutiny - the appeal is partly allowed in favour of the appellant by setting aside the penalty imposed on it under Section 11 AC ibid.
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