2010 (9) TMI 524 - AT - Central Excise

Interest on cenvat credit irregularly availed and utilized - Penalty - the admissibility of the cenvat credit in question to the appellant in respect of items such as MS plates, angles, channels, beams etc. which were used for civil construction work, laying railway track etc. is not a surviving issue inasmuch as the entire amount of credit irregularly availed by the appellant was voluntarily reversed by them even prior to issuance of show-cause notice and there is no grievance raised in this appeal in relation to such credit. ld. Commissioner directed the appellant to pay interest under Rule 12/14 of the Cenvat Credit Rules, 2002/2004 read with Section 11AB of the Central Excise Act on the amount of cenvat credit upto the date of reversal (4-2-2005) Regarding penalty - The assessee cannot be penalized for a lapse/omission/commission which directly resulted from commissions/omissions of an officer of Central Excise - it could not have been alleged that the appellant suppressed with intent to avail inadmissible credit The penalty imposed on them under Rule 13(1)/Rule 15(1) of the said Rules will, however, stand on a different footing - This penalty is on the ground of irregular availment of inadmissible cenvat credit simpliciter - In the result, the impugned order is sustained except in respect of one of the penalties which have set aside - The appeal is disposed of

Summary

Issues:
1. Liability to pay interest on cenvat credit irregularly availed and utilized.
2. Liability to be penalized under Section 11AC of the Central Excise Act and Rule 13(1)/15(1) of the Cenvat Credit Rules, 2002/2004.

Analysis:

1. Interest on Cenvat Credit:
- The appellant voluntarily reversed the irregularly availed cenvat credit before the show-cause notice was issued.
- The Commissioner directed the appellant to pay interest on the credit amount till the date of reversal, which was not challenged in the appeal.
- The appellant argued that interest should be levied only from the date of credit utilization, not from the date of availing.
- The appellant claimed no utilization of a major part of the credit in question, but the records did not support this claim.
- The reversal of credit before the show-cause notice was not voluntary but done at the Department's instance.
- The Tribunal held that interest is payable from the date of credit utilization to the date of reversal, to be quantified by the Commissioner after providing an opportunity for submission and hearing.

2. Penalties:
- Two penalties were imposed on the appellant under Rule 13(1)/Rule 15(1) and Rule 13(2)/Rule 15(2) of the Cenvat Credit Rules, 2002/2004 along with Section 11AC of the Central Excise Act.
- The major penalty under Section 11AC was challenged by the appellant, arguing no suppression of facts as all material details were disclosed through mandatory returns.
- The Commissioner invoked Section 11AC beyond the scope of the show-cause notice, while other penal provisions were within the notice's scope.
- The Revenue alleged suppression of material facts by the appellant to avail inadmissible credit, but the appellant contended that all necessary information was provided in the returns.
- The Tribunal found that the appellant's disclosures in returns were sufficient, and any omission by the Central Excise officer in verifying the details cannot be attributed to the appellant.
- The penalty under Rule 13(2)/Rule 15(2) was set aside, while the penalty under Rule 13(1)/Rule 15(1) for irregular availment of credit was upheld.

In conclusion, the Tribunal sustained the impugned order, except for setting aside one penalty. The appeal was disposed of accordingly.