2011 (9) TMI 1122 - HC - Central Excise

Summary

Issues:
Challenge to order of Central Board of Excise and Customs suspending monthly payment of excise duty and directing payment without utilizing CENVAT credit. Contention of absence of mens rea in availing credit twice. Interpretation of Notification No.32/2006-C.E. (N.T.) regarding violations and penalties. Justification of revenue for imposing restrictions based on the conduct of the assessee.

Detailed Analysis:

Issue 1: Challenge to order of Central Board of Excise and Customs
The appellant, engaged in manufacturing ATM Machines, challenged the order suspending the facility of monthly payment of excise duty and directing payment without utilizing CENVAT credit. The inspection revealed the assessee availed credit twice against a single document, leading to proceedings initiated by the department. The Central Board of Excise and Customs suspended the facility based on serious misconduct by the assessee.

Issue 2: Contention of absence of mens rea
The appellant contended that the revenue failed to prove mens rea before withdrawing benefits granted earlier. The appellant argued that the revenue should establish knowingly involvement before passing the impugned order. The appellant justified the incident as a bona fide mistake, emphasizing the balance of credit exceeding the amount pointed out by the revenue.

Issue 3: Interpretation of Notification No.32/2006-C.E. (N.T.)
The core issue revolved around whether the revenue had sufficient materials to conclude the involvement of the assessee in a fraudulent transaction with mens rea. The notification outlined violations and penalties for manufacturers and exporters involved in malpractices, aiming to discourage misuse of facilities. The authorities were entitled to withdraw benefits in case of proven violations based on prima facie evidence of fraudulent actions by the assessee.

Issue 4: Justification of revenue for imposing restrictions
The revenue justified imposing restrictions based on the conduct of the assessee, indicating a deliberate attempt to avail credit twice by splitting the amount into multiple entries. The evidence collected by the Department of Central Excise supported the action against the appellant, demonstrating intentional splitting of credit entries. The appellant's defense of having a significant credit balance did not negate the deliberate act of splitting credit entries, showcasing mens rea.

Conclusion:
The court upheld the revenue's decision, concluding that the materials presented clearly indicated the appellant's knowing involvement in availing credit twice. The court found no reason to overturn the decision, dismissing the writ appeal and closing the connected matters without costs.