2007 (4) TMI 423 - Commission - Central Excise

Summary

Issues: Settlement application for inadmissible Cenvat credit, duty liability, interest liability, penalty imposition, prosecution immunity

In this judgment by the Settlement Commission for Customs and Central Excise, the main applicant, a Two Wheeler manufacturer, and the co-applicant filed settlement applications due to a show cause notice (SCN) issued for availing inadmissible Cenvat credit on fixed assets and components. The SCN proposed a substantial demand for inadmissible credit and penalties. The Additional Commissioner confirmed the demands and penalties in the adjudication order, with an appeal pending before the Commissioner (Appeals). The applicants sought final settlement, admitting the allegations and duty liability, emphasizing their credit balance exceeding the demand. The Revenue confirmed full deposit by the main applicant but argued for interest and penalties due to the deliberate retention of credit despite awareness. The Bench considered the applications, noting the full disclosure by the main applicant and the reversal of credit amounts for the years 2001, 2002, and 2003. The total duty demanded in the SCN was paid/reversed, and the interest liability was deposited before the SCN issuance.

Regarding the settlement terms, the Bench admitted the applications under the Central Excise Act, settling the total duty liability for inadmissible Cenvat credit. The main applicant's deposited amount was appropriated towards the liability, granting immunity from interest exceeding 10% per annum. The main applicant was directed to pay simple interest at 10% per annum from the date of credit reversal until actual payment, with any excess interest to be paid within 15 days. Immunities from penalty and prosecution were granted to both applicants upon payment as per the settlement order. These immunities were provided under the Act, with a caution that any concealment, false evidence, or fraud would void the order and withdraw the immunities. The attention was drawn to relevant sections of the Act to emphasize the consequences of non-compliance with the settlement terms.