2008 (3) TMI 578 - AT - Central Excise

Summary

Issues Involved: Appeal against penalty imposed under Rule 15 of the Cenvat Credit Rules, 2004 for irregular availing of credit.

Summary:
The Revenue appealed against the Order-in-Appeal No. 313/2006-C.E. dated 3-11-2006, passed by the Commissioner of Central Excise (Appeals), Mangalore. The Respondents had received capital goods and availed the entire credit in the first financial year instead of following the prescribed procedure of 50% credit in the first year and the balance in subsequent years. The Department pointed out this irregularity, leading the Respondent to reverse the credit. Despite this, the Revenue imposed a penalty of Rs. 10,000/- under Rule 15 of the Cenvat Credit Rules, 2004, even though the actual credit amount was only Rs. 7,082/-. The Commissioner (Appeals) set aside the penalty, noting that duty and interest had been paid before the show cause notice was issued, and the credit had not been utilized at all. The Revenue contended that the Respondent violated Central Excise Rules and should be penalized regardless of the credit reversal.

Upon hearing the arguments, the Tribunal found that the Respondent had inadvertently availed 100% credit but promptly reversed it along with interest upon detection of the irregularity. Considering these circumstances, the Tribunal upheld the decision of the Commissioner (Appeals) to set aside the penalty. The Tribunal concluded that there was no merit in the Revenue's appeal, and thus, the appeal was dismissed.