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2007 (3) TMI 450 - AT - Central Excise
Issues involved: Appeal against order setting aside interest under Section 11AB and reducing personal penalty from Rs. 1 lakh to Rs. 20,000.
Interest under Section 11AB: The Commissioner (Appeals) set aside the confirmation of interest under Section 11AB as the appellants had reversed the inadmissible Cenvat credit before the show cause notice was issued. The Tribunal decision in the case of CCE v. Machino Montell (I) Ltd., 2004, was cited to support this stance. The department contended that the Cenvat credit was not admissible due to its use in manufacturing exempted goods. The appellants contested only the imposition of interest and penalty. The Commissioner found that interest under Section 11AB was not imposable in the given circumstances. The Tribunal's decision was crucial in determining the applicability of interest under Section 11AB. Penalty under Rule 13 of Cenvat Credit Rules 2002: The penalty was imposed under Rule 13 of Cenvat Credit Rules 2002, not under Section 11AC as in the case of CCE v. Machino Montell (I) Ltd., 2004. The penalty amount of Rs. 1,00,000 under Rule 13 was reduced to Rs. 20,000 since the irregular credit had been reversed before the show cause notice was issued. The Commissioner (Appeals) justified the reduction of penalty to Rs. 20,000 based on the absence of mala fide intent on the part of the assessee and the credit being filed with the knowledge of Central Excise officers. The reduction of penalty was deemed appropriate given the circumstances. Conclusion: The respondents had taken credit during a specific period when there was a dispute about the exciseability of their final products. However, since they were clearing the final products without duty payment, the credit remained unused and was eventually reversed. The absence of mala fide intent and the credit being disclosed to Central Excise officers supported the reduction of penalty to Rs. 20,000 by the Commissioner (Appeals). The revenue's appeal was rejected based on these findings.
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