2004 (2) TMI 501 - AT - Central Excise

Summary

Issues: Recovery of interest and penalty

Recovery of Interest:
The appellants challenged the recovery of interest imposed by the lower authority. The case involved the utilization of Cenvat credit on raw materials for manufacturing M.S. Tanks, which were considered immovable property. The appellants reversed the credit following a CBEC Circular. The Tribunal noted that the duty liability was determined after the payment was made, thus interest liability did not arise. Consequently, the interest liability was set aside.

Recovery of Penalty:
The appellants contested the penalty imposed for the utilization of credit on components of M.S. Tanks. The appellants argued that they reversed the credit upon realizing the ineligibility. The Tribunal considered past clarifications and held that the appellants could not solely rely on the circular for knowledge. However, considering the possibility of misunderstanding and the nature of the goods involved, the Tribunal took a lenient view. It held that the penalty for taking ineligible credit was not warranted. Therefore, the penalty was set aside.

In conclusion, the appeal succeeded in setting aside the penalty and interest aspects of the lower authority's orders. The denial of credit, which was not under dispute, remained unchanged. The Tribunal allowed the appeal based on the above considerations.