2012 (5) TMI 597 - AT - Central Excise

Summary

Issues involved:
The issues involved in the judgment are the disallowance of wrongly availed credit, imposition of penalty, and the interpretation of Notification No. 30/2004 regarding CENVAT credit lapse.

Disallowed Credit and Penalty:
The adjudicating authority disallowed the wrongly availed credit of Rs. 1,41,226 with interest and imposed an equivalent amount of penalty. The appellants, manufacturers of man-made fabrics, had availed excess CENVAT credit in August 2003 and December 2003 without proper documentation. They reversed the amounts in 2007 as per the conditions of the Notification. The Revenue contended that since the appellants admitted to taking the credit wrongly, they were liable to pay back the amount with interest and penalty. The Commissioner (Appeals) upheld this decision. However, the appellants argued that the wrongly taken amount should be adjusted from their CENVAT credit balance, which was sufficient prior to the lapse date mentioned in the Notification. The appellate tribunal found that the closing balance on the lapse date was more than the wrongly availed credit, leading to the conclusion that no payment was required, and no penalty was imposable. Consequently, the impugned order was set aside, and the appeal was allowed.

Interpretation of Notification No. 30/2004:
The appellants relied on Notification No. 30/2004, claiming that their CENVAT credit balance lapsed as per the Notification. They argued that since they had a significant balance in their CENVAT account before the lapse date, the wrongly taken amount should be adjusted from this balance. This argument was crucial in determining whether the appellants were required to pay the amount as per the impugned order. The tribunal's analysis of the CENVAT account balance and the impact of wrongly availed credit on the closing balance on the lapse date led to the decision that no payment was necessary post the lapse date mentioned in the Notification.