2017 (6) TMI 1195 - AT - Central Excise

Penalty - Disallowance of already debited Cenvat Credit - Held that - the debit entry of an irregular Cenvat credit will nullify the credit taken in the Cenvat account - Since the appellant has debited all the entries of Cenvat credit objected by Revenue alongwith interest there was no need for issue of present SCN - Since SCN was not to be issued, the question of imposition of penalty does not arise - appeal allowed in part.

Summary

Issues:
1. Admissibility of Cenvat Credit
2. Imposition of Penalty

Admissibility of Cenvat Credit:
The appeal was filed against Order-In-Appeal No. 04/CE/APPL/ALLD/2012 issued by the Commissioner (Appeals) Central Excise, Allahabad. The appellant, a manufacturer of Sugar and Molasses, was found to have taken inadmissible Cenvat Credit as per the audit conducted by the Revenue. The appellant debited the disputed Cenvat Credit entries in their account and also paid the interest as per the show cause notice. The Original Authority confirmed the demand, imposed a penalty, and ordered the payment of interest. The Commissioner (Appeals) upheld the Order-in-Original and rejected the appeal. The appellant contended that as per the Supreme Court ruling in Chandrapur Magnet Wires Pvt. Ltd. v/s Collector of Central Excise, Nagpur, the debited entries should nullify the Credit entries. Since the appellant had debited all the entries objected by the Revenue along with interest, the Tribunal modified the Order-in-Appeal by setting aside the penalty imposed, allowing the appeal partially.

Imposition of Penalty:
The learned Counsel argued that since all the disputed Cenvat Credit entries were debited along with interest, as per the Supreme Court ruling, the penalty imposed should be set aside. The Tribunal, after considering the arguments, referred to the Supreme Court's ruling that a debit entry of an irregular Cenvat credit will nullify the credit taken in the Cenvat account. As the show cause notice was not required due to the debiting of entries by the appellant, the Tribunal concluded that the imposition of penalty was unnecessary. Therefore, the Tribunal modified the Order-in-Appeal by setting aside the penalty, partially allowing the appeal.

In conclusion, the Tribunal's judgment focused on the admissibility of Cenvat Credit and the imposition of penalty. The decision was based on the appellant's action of debiting the disputed entries along with interest, in line with the Supreme Court's ruling. The Tribunal set aside the penalty imposed by the Original Authority and upheld by the Commissioner (Appeals), partially allowing the appeal in favor of the appellant.