2009 (6) TMI 909 - AT - Central Excise

Summary

Issues:
1. Appeal against setting aside demand of interest and penalty on improper Cenvat Credit availed by the respondent.
2. Respondent's contention of being unaware of improper invoices.
3. Discharge of interest and penalty by the respondent during the investigation.

Analysis:

Issue 1:
The appeal was filed by the Revenue against the Order-in-Appeal setting aside the demand of interest and penalty on the improper Cenvat Credit availed by the respondent. The Revenue contended that the respondent had availed Cenvat Credit on wrong invoices issued by a registered dealer, leading to fraudulent passing of credit on 'Pig Iron' to unregistered manufacturers. The Adjudicating Authority confirmed the demand and imposed penalties and interest. However, the Commissioner (Appeals) set aside the demand of interest and penalty, stating that the respondent had deposited the entire amount before the show cause notice. The Tribunal held that the respondent's intention to avail wrong credit fell under the provisions for penalty imposition, thus upholding the setting aside of interest but rejecting the challenge to setting aside penalties.

Issue 2:
The respondent's counsel argued that the respondent was unaware of the improper invoices, claiming they held Central Excise Registration for manufacturing Cast Iron, Castings, and availed Cenvat Credit on these inputs without knowledge of the dealer's actions. The Tribunal noted that the respondent had discharged the entire Cenvat Credit and interest amount during the investigation, indicating cooperation. The respondent did not challenge this part of the proceedings, and the Tribunal found the respondent's contention of being unaware of the improper invoices justifiable, leading to the setting aside of penalties.

Issue 3:
Upon careful consideration, the Tribunal found that the respondent had indeed availed and utilized the Cenvat Credit, making them liable to pay interest. Despite the respondent's claim of being unaware of the improper invoices, the Tribunal upheld the setting aside of penalties due to lack of contrary evidence. Therefore, the Tribunal partly upheld the Revenue's appeal by setting aside the interest demand but rejected the challenge to setting aside penalties, disposing of the appeal accordingly.