2008 (9) TMI 779 - AT - Central Excise

Summary

Issues:
Availment of excess Cenvat credit on imported Liquid Ammonia leading to demand of duty, interest, and penalty.

Analysis:
The appeal stemmed from an Order-in-Appeal passed by the Commissioner of Customs & Central Excise, Visakhapatnam, concerning the availing of Cenvat credit on imported Liquid Ammonia. The appellants imported 600 Mt of ammonia under a specific Bill of Entry, paying Rs. 6,75,562/- as CVD. However, they availed credit exceeding this amount by Rs. 10,244/-. The Revenue initiated action, confirming the differential credit and demanding interest under Rule 12 of the Central Excise Credit Rules, 2002, along with imposing a penalty of Rs. 10,000/- under Rule 25 of the Cenvat Credit Rules, 2002.

During the proceedings, the learned Jt. CDR contended that the appellants violated regulations by claiming credit for excess quantity not received. Conversely, the learned Advocate argued that the excess credit was due to an inadvertent error, supported by evidence showing the subsequent receipt of the allegedly excess material. The Tribunal, after careful consideration, acknowledged the initial lapse by the appellants in claiming excess credit without receiving the entire material. However, they noted that the shortfall was later rectified with the material being received. As there was no revenue loss, the demand for duty was deemed unjustified. Nonetheless, in light of the credit lapse, a penalty was deemed appropriate. Considering the circumstances and the amount involved, the penalty was reduced from Rs. 10,000/- to Rs. 2000/-. Consequently, the appeal was disposed of with the modified penalty amount.

In conclusion, the Tribunal recognized the inadvertent error in availing excess credit but found no revenue loss due to the subsequent receipt of the material. While justifying the penalty imposition for the lapse, they reduced the penalty amount considering the facts and circumstances of the case, ultimately resolving the appeal.