2009 (5) TMI 846 - AT - Central Excise

Summary

Issues involved: Appeal against payment of interest and imposition of penalty of Rs. 10,000 based on taking credit of Rs. 14,030 on the basis of photocopy of invoices by mistake.

Summary:

The appellant filed an appeal against the payment of interest and imposition of penalty of Rs. 10,000 based on mistakenly taking credit of Rs. 14,030 on the basis of photocopy of invoices. The Original Authority imposed a penalty equal to the amount of duty along with interest, which was later reduced to Rs. 10,000 by the Commissioner (Appeals).

Upon hearing both sides and reviewing the records, it was argued that the appellants did not utilize the credit, as evidenced by their reply to the show cause notice and the Chartered Accountant's certificate. The Commissioner (Appeals) also noted the absence of any suppression or mala fide intention to evade duty. Therefore, the imposition of penalty under Rule 13(2) of the Cenvat Credit Rules, 2002 read with Section 11AC of the Central Excise Act, 1944 was deemed unsustainable. It was clarified that credit taken but not utilized is not liable for interest.

The appellants explicitly stated before the Original Authority that they did not utilize the credit, a fact not disputed in the impugned order. Although they wrongly took credit and voluntarily debited it, the imposition of penalty was considered justified. Consequently, the payment of interest and penalty was set aside, and the appeal was allowed.

(Order dictated and pronounced in open court on 14-5-2009)