Per Jyoti Balasundaram
For the reasons recorded below, we waived predeposit of penalty of Rs.30 lakhs imposed upon the assessees herein for wrong availment of CENVAT credit during the period April 2007 to March 2008 and proceed to hear and decide the appeal itself at this stage with the consent of both sides.
2. The service tax amount of Rs.1,24,36,820/- utilized by the assessees during the period in dispute has been reversed on 30.4.08 prior to the issue of show-cause notice dt. 21.7.08. In these circumstances, the provisions of Section 73 (3) of the Finance Act, 1944 are attracted so as to hold that assessees are not liable to any penal action. Section 73 (3) reads as under :-
“SECTION 73. ‘Recovery of service tax not levied or paid or short-levied or short-paid or erroneously refunded.
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(3) “Where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded, the person chargeable with the service tax, or the person to whom such tax refund has erroneously been made, may pay the amount of such service tax, chargeable or erroneously refunded, on the basis of his own ascertainment thereof, or on the basis of tax ascertained by a Central Excise Officer before service of notice on him under sub-section (1) in respect of such service tax, and inform the [Central Excise Officer] of such payment in writing, who, on receipt of such information shall not serve any notice under sub-section (1) in respect of the amount so paid :
Provided that the [Central Excise Officer] may determine the amount of short-payment of service tax or erroneously refunded service tax, if any, which in his opinion has not been paid by such person and, then, the [Central Excise Officer] shall proceed to recover such amount in the manner specified in this section, and the period of one year referred to in sub-section (1) shall be counted from the date of receipt of such information of payment.
Explanation. For the removal of doubts, it is hereby declared that the interest under section 75 shall be payable on the amount paid by the person under this sub-section and also on the amount of short payment of service tax or erroneously refunded service tax, if any, as may be determined by the [Central Excise Officer], but for this sub-section.”
3. Our view finds support from Tribunal’s order in Santi Casting Works Vs CCE [2009 (15) STR 219] which has been followed in CCE Vs Sagar Enterprises [2010 (18) STR 212]. Following the ratio of the above decisions which have interpreted the relevant statutory provisions, we set aside the impugned order of imposition of penalty, and allow the appeal.