2011 (1) TMI 82 - AT - Central Excise

Penalty and interest - Cenvat credit - explanation offered on behalf of the appellants that in stray cases where the original copy was misplaced, they have taken the credit based on the photocopies of the bills of entry appears reasonable and acceptable - receipt of the materials and use of the same for intended purpose is not in dispute - No malafide intention as such is alleged against the appellants - fit case where on payment of duty involved alongwith interest, no show cause notice should have been issued Appeal disposed

Summary

Issues:
Appeal against penalty imposition for cenvat credit based on photocopies of bills of entry.

Analysis:
The appeal was made against the penalty of Rs.55,302 imposed by the Commissioner (Appeals) for taking cenvat credit based on photocopies of bills of entry issued in the name of another company. The appellants admitted the mistake, debited the entire amount along with interest upon audit discovery. The original authority confirmed the demand and penalty, which was upheld by the Commissioner (Appeals).

The appellant's advocate argued that the credit was mistakenly taken due to lost/misplaced original copies while undertaking job work for the company named on the bills of entry. They contended it was a genuine error promptly rectified by paying the credit along with interest. The advocate also highlighted the absence of specific grounds for invoking extended limitation period and imposing penalty in the show cause notice.

On the other hand, the SDR representing the respondent argued that taking credit based on photocopies was irregular and justified the penalty imposition.

After considering both arguments and examining the records, the judge found the appellant's explanation reasonable. It was accepted that the credit was taken on photocopies due to misplaced original copies in isolated instances, with no malafide intent alleged. The judge noted that the receipt and use of materials were not in dispute. While the inadmissibility of credit was acknowledged, the judge deemed the penalty unjustified. Consequently, the judge upheld the duty demand and interest as uncontested but set aside the penalty.

In conclusion, the judgment disposed of the appeal by upholding the duty demand and interest while overturning the penalty imposition.