2011 (8) TMI 33 - AT - Central Excise

Demand - Classification - the appellant is not challenging reversal of cenvat credit as well as interest. However, as regards penalty, he submits that there were several decisions of the tribunal taking a view that credit is admissible in respect of MS Angles, Channels, Plates, Beams etc., till the matter was settled - there were decisions taking a view that credit is admissible on these items, it cannot be said that appellant indulged in suppression of facts/ mis-declaration with an intention to evade payment of duty - Decided in favour of the assessee

Summary

Issues:
1. Admissibility of cenvat credit on certain goods under Chapter 72 of the Central Excise Tariff Act, 1985.
2. Liability for interest on wrongly availed cenvat credit.
3. Imposition of penalty under Section 11AC of the Central Excise Act, 1944.

Admissibility of Cenvat Credit:
The appellant, engaged in manufacturing articles under Chapter 72, availed cenvat credit for goods like MS Angles, Channels, Plates, Beams, etc. The department contended that treating these goods as capital goods for credit was inadmissible. The appellant, after agreeing with the audit findings, paid back the cenvat credit with interest. Subsequently, a show cause notice was issued, leading to the impugned order stating that interest is chargeable when wrongly availed credit is not utilized before reversal. The appellant did not contest the reversal of credit and interest, citing a Supreme Court decision supporting the liability for interest on wrongly taken credit.

Liability for Interest:
The Hon'ble Supreme Court decision in the case of M/s. Ind-Swift Laboratories Limited established that interest is payable on wrongly taken cenvat credit that has not been utilized. The appellant acknowledged this position, leading to the acceptance of interest liability.

Imposition of Penalty:
Regarding the penalty under Section 11AC, the appellant argued that various Tribunal decisions supported the admissibility of cenvat credit on items like MS Angles, Channels, Beams, Plates, etc., until the matter was clarified. Citing precedents like Ispat Industries Limited vs. CCE Mumbai and others, it was argued that there was no intention to evade duty, as there was no suppression of facts. Consequently, the penalty under Section 11AC was deemed unsustainable. The Tribunal upheld the demand for cenvat credit and interest, as the appellant did not contest it, while setting aside the penalty imposed.

In conclusion, the judgment upheld the demand for cenvat credit and interest, as the appellant did not challenge these aspects. However, the penalty under Section 11AC was overturned based on the Tribunal's view that there was no intent to evade duty due to the existence of precedents supporting the admissibility of cenvat credit on the disputed goods.