2007 (10) TMI 488 - AT - Central Excise

Summary

Issues involved: Imposition of penalty and interest on availing Cenvat credit on education cess paid on Customs duty.

The Appellate Tribunal CESTAT, Mumbai considered the case where the appellant had availed Cenvat credit on education cess paid on Customs duty, which was later reversed upon revenue's pointing out. A show cause notice was issued for penalty under Rule 27 of Central Excise Rules, 2001/2002 and interest under Section 11AB of CETA 1944. The Tribunal found that the case involved a misinterpretation regarding the availment of credit on education cess paid on customs duty, which was a disputed issue initially. Consequently, the Tribunal upheld the order confirming the interest amount but set aside the penalty imposition, citing no valid reason for it. The appellant was required to pay interest for the wrongly availed Cenvat credit, and the provisions were amended with effect from 11-5-2001. The eligibility of education cess on customs duty was a contentious matter in the initial period, leading to the decision to waive the penalty in this case. The Tribunal ordered accordingly, maintaining the interest payment while overturning the penalty imposition.