2013 (12) TMI 1487 - AT - Central Excise

Penalty u/s 11AC - difference between the amount of Cenvat credit details shown in the return filed by the assessee with the department and the Cenvat credit register maintained by the assessee - Held that - There was mistake in data entry and errors occurred. The appellant as submitted seems to have paid the same amount twice - Even if the credit had been taken wrongly, apparently it was because of some errors in data entry and not with an intention. That being the position, penalty imposed under Section 11AC cannot be sustained - appeal allowed.

Summary

Issues: Discrepancy in Cenvat credit details leading to penalty under Section 11AC of Central Excise Act, 1944.

In this case, the issue revolved around a discrepancy in the Cenvat credit details of the assessee, where the amount shown in the return filed with the department differed from the Cenvat credit register maintained by the assessee. The difference amounted to &8377; 3,49,589. Initially, the appellant contested the excess credit availed, attributing it to errors during data entry in the SAP software system. The appellant maintained that their ledger outside the SAP system reflected the correct position. Despite paying the Cenvat credit with interest upon issuance of a show cause notice, a penalty under Section 11AC was imposed. The challenge was limited to the penalty imposition.

The Tribunal analyzed the submissions and evidence presented by both sides. It was noted that the appellant claimed the Cenvat credit ledger was generated by the SAP system, while they maintained another ledger based on which credit was taken. The Commissioner (Appeals) acknowledged that the appellant had unintentionally availed irregular credit each month, which was rectified upon being pointed out by Revenue Audit officers. The Commissioner observed that although this was not a deliberate act attracting Section 11AC, it still constituted a contravention of the Cenvat Credit Rules.

For the penalty under Section 11AC to be imposed, it was established that mere contravention of rules was not sufficient; there had to be an intention to evade duty payment. Given that there was no evidence of such intention, the Tribunal concluded that the penalty under Section 11AC should have been set aside. The Tribunal further examined the circumstances and found that the errors in data entry had led to the mistaken double payment by the appellant. Considering all factors, including the absence of intentional wrongdoing, the penalty imposed under Section 11AC was deemed unsustainable. Consequently, the appeal was allowed, setting aside the penalty imposed under Section 11AC of the Central Excise Act, 1944.