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2016 (5) TMI 230 - CESTAT CHENNAI

2016 (5) TMI 230 - CESTAT CHENNAI - TMI - Levy of equal penalty u/s 78 of the Finance Act, 1994 - Invokation of Section 80 ibid - Reversal of excess Cenvat credit availed along with interest under protest before issuance of SCN - Held that:- there is no suppression of facts with an intention to evade payment of duty, as the respondent has paid the service tax and interest by showing their Bonafides. Therefore, a reasonable cause is present to invoke Section 80 ibid and the penalty is waived of. .....

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eferred to as Respondent ) was subject to audit by the Service Tax authorities. During the course of audit, it was noticed by the Revenue that excess CENVAT Credit was availed by the Respondent to the tune of ₹ 13,69,210/-. The Respondent had agreed to the aforesaid observation of the audit department and has reversed the CENVAT Credit availed along with interest under protest before issuance of Show cause notice. A show cause notice no. LTUC/147/2011- (ADC) dated 21.04.2011 was issued sta .....

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d and interest was paid much before the issuance of show cause notice and that the said fact has been recorded in the Show cause notice itself; that there was no suppression in the present case as the CENVAT Credit details were submitted to the authorities at the time of filing the refund claim. 3. The original adjudicating authority adjudicated the matter and passed the Order-in-Original No. LTUC/53/2012-ADC dated 6.2.2012 whereby the tax and interest paid under protest was appropriated and pen .....

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the Ahemdabad Tribunal in the case of Atwood Oceanics Pacific Ltd. Vs, CST Ahemdabad - 2013 (32) STR 756 (Tri.-Ahmd.) for waiver of penalty under Section 80 of the Finance Act, 1994. Being aggrieved by the order passed by the Commissioner (Appeals), the appellant-Revenue has preferred this appeal before Tribunal. 4. In the grounds of appeal, the Revenue has contended that the respondent-assessee had availed wrong CENVAT Credit on many occasions and that was not disclosed to the department either .....

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t; that in the case of UOI Vs. Dharmendra Textile Processor - 2008 (231) ELT 3, the Hon'ble Supreme Court has held that any penalty otherwise imposable under Section 11AC of the Central Excise Act, 1944 cannot be avoided on the ground that the duty amount was paid by the assessee prior to issuance of show cause notice. 5. Shri K.P. Muralidharan, AC, Ld. A.R appearing for the Appellant-Revenue, re-iterated the grounds of appeal and stated that equal penalty ought to be levied in the present c .....

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cific Ltd. (supra) is squarely applicable to the facts of the case and that merely because an appeal has been preferred against the said ruling would not be a ground for appeal. He placed reliance on the ruling of the Supreme Court in the case of Union Of India Vs Kamlakshi Finance Corporation Ltd. - 1991 (55) ELT 433 (SC) to support his argument. He also submitted that the Respondent is a large tax payer and the quantum of data handled by the Respondent was voluminous i.e. the mistake had happe .....

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relied by the Appellant is squarely distinguishable. He also submitted that several audits were conducted by the Appellant before and during the period of dispute and they were completely aware of all facts for the said period. He further submitted that it is an admitted fact that there was a mistake at the time of availment of credit however it was never the intention of the Respondent to wilfully suppress facts from the Department with an intention to evade payment of tax as all facts were mad .....

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has stressed that given the volume of data handled by the Respondent, minor mistakes are bound to happen. In this regard, I find that the ruling of the CESTAT in the case of Canara Bank Vs CST Bangalore (supra) is squarely applicable to the facts of the present case. The relevant extract of the ruling is reproduced below: "6. Regarding imposition of penalty of INR 14,67,499/- (Rupees Fourteen Lakhs Sixty Seven Thousand Four Hundred and Ninety Nine only) imposed under Rule 15(1) of Cenvat C .....

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es such unintentional mis-happenings/mistakes do take place for which the appellant is not to be punished by imposing the penalties. The appellant has also cited in defense the Honble Supreme Courts decision in the case of Hindustan Steel Ltd. Vs. State of Orissa [1978 (2) E.L.T. (J159) (SC)] saying that in case of unintentional lapse imposition of penalty is not justified. 7. Considering the facts on record and the decision of the Honble Supreme Court in the case of Hindustan Steel Ltd. Vs. S .....

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akhs Sixty Seven Thousand Four Hundred and Ninety Nine only) is not justified. The Hon ble Supreme Court inter alia has held as below: An order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceeding, and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. Penalty will not also be impo .....

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belief that the offender is not liable to act in the manner prescribed by the statute. Those in charge of the affairs of the Company in failing to register the Company as a dealer acted in the honest and genuine belief that the Company was not a dealer. Granting that they erred, no case for imposing penalty was made out. The Revenue has alleged that there was wilful suppression in the present case as they had detected that wrong availment of credit only during the course of audit conducted by t .....

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x along with interest much before the issuance of show cause notice and they have borne the incidence of tax on their shoulders, is sufficient evidence to show that the reasons for not paying the service tax by the assessee were the technical/ legal reasons rather than wilful suppression with an intent to evade payment of service tax . From the above, we find that besides our own observations finding of the Commissioner with which we agree, support the view that provisions of Section 80 are requ .....

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al can furnish no ground for not following a judicial pronouncement unless its operation has been suspended by a competent Court. Based on the above, I am of the view that there is no suppression in the present case, as contended by the Appellant, as the Respondent has paid the service tax and interest by showing their Bonafides. The Appellant has relied on the ruling of the Madras High Court in the case of Dhandayuthapani Canteen (supra) wherein it was held that penalty is payable even though s .....

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