TMI Blog2016 (2) TMI 183X X X X Extracts X X X X X X X X Extracts X X X X ..... l and when it was further found that the records were available for the Revenue to verify the correctness, the Tribunal, in our opinion, rightly did not dis-entitle the assessee from the entire Cenvat credit availed for payment of duty - Decided against revenue Coming to the question of penalty, right from the show cause notice stage till the final disposal of the show cause notice proceedings, we find little evidence to support the allegations of willful misstatement, suppression, fraud or collusion on the part of the assessee. In fact, perusal of the show cause notice would show that the entire basis of the Revenue was wrongfully availment of the credit. Mere wrongfully availment without element of mens rea and that too for the purpose of evading payment of duty would not be sufficient to impose penalty. The adjudicating authority, without any basis or evidence, merely mechanically recorded that the assessee had, by reason of willful misstatement, suppression of fact or in contravention of the provisions of the Rules, evaded payment of central excise duty. He was not even sure whether this was a case of willful misstatement or suppression of fact or contravention of provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... put service amounting to ₹ 1.51 crores (rounded off) should not be recovered with interest and penalties. In the show cause notice itself, the adjudicating authority had referred to sub-rule (3) of Rule 15 of the Rules of 2004 as basis for such proposal. Two primary objections of the Department appear to be that the assessee had not registered itself under the Service Tax (Registration of Special Category of Persons), Rules 2005 ((hereinafter to be referred as the Rules of 2005 ) and that the tax credit from one unit was utilized for discharging tax liability of another unit instead of pro rata distribution amongst different units. Despite resistance from the assessee, the adjudicating authority by the Order in Original dated 15.12.2008 confirmed the duty demands with interest and penalties, making following observations:- 16. As can be seen from the discussions above, the noticee has violated all the rules pertaining to the availment and utilization of service tax credit and the notifications made there under. By any stretch of imagination, it cannot be accepted that violation of rules can be termed as procedural / technical lapse. The Rules are framed for conveying and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rity and allowed the appeal. The Tribunal noted the contention of the assessee that the assessee had maintained all the registers in the excel sheets and that the Department could have easily verified the correctness of the credits availed. The Tribunal held and observed as under:- 5. We have considered the submissions made by both sides. We find considerable force in the arguments advanced by the learned counsel. The registered office and Vatva office both are located in the same place and appellant has simply utilized the credit at Vatva instead of distributing it to various units. As submitted by the learned counsel, during the relevant period, there was no restriction for utilization of such credit without allocating proportionately to various units. The omission to take registration as an Input Service Distributor can at best be considered as procedural irregularity and in view of the decisions cited, has to be considered sympathetically. Further, it is also noticed that appellant has not got any extra benefit by doing this. In fact from the statement of Shri Chandresh C.Shah, as explained that above cenvat credit available to them, 20% of service tax payable only was paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period. 6. The first objection of the Department therefore that the credit from one unit was utilized for the purpose of duty liability of other unit without pro rata distribution by the input service distributor therefore would not survive in view of no previous restriction of this nature flowing from Rule 7 of the Rules of 2004. In fact, the Tribunal has seen entire situation as a Revenue neutral, since as pointed out by the assessee, it had availed only 20% of the credit for payment of service tax and the balance was paid in cash. 7. The second objection of the Revenue as noted was with respect of non-registration of the unit as input service distributor. It is true that the Government had framed Rules of 2005 for registration of input service distributors, who would have to make application to the jurisdictional Superintendent of Central Excise in terms of Rule 3 thereof. Sub-rule (2) of Rule 3 further required any provider of taxable service whose aggregate value of taxable service exceeds certain limit to make an application for registration within the time prescribed. However, there is nothing in the said Rules of 2005 or in the Rules of 2004 which would automaticall ..... X X X X Extracts X X X X X X X X Extracts X X X X
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