2011 (3) TMI 357 - AT - Central Excise

Cenvat credit of an amount of Rs. 54488/- twice - under Section 11AB and also imposed equivalent penalty under Section 11AC read with Rule 15 of the Cenvat Credit Rules - AC. Coming to the issue of wrong Cenvat credit availed due to double entry, as soon as the mistake was pointed out, the appellant had reversed the credit and also paid the interest thereon. The Commissioner (Appeals) while reducing the penalty has rightly observed that it was a bona fide error on the part of the appellant. We are of the view that when the error itself is bona fide as found by the lower appellate authority, such bona fide errors need to be condoned under the discretionary powers provided for in the law. All the judgments cited above and relied upon by the appellant fully support the contention of the appellant assessee in this regard. Accordingly we set aside the penalty amount of Rs. 5448/- confirmed in the impugned order.

Summary

Issues:
1. Cenvat credit wrongly taken twice.
2. Non-inclusion of tooling cost in exports.
3. Demands for duty, interest, and penalty imposed.
4. Appeal against the order of the Asst. Commissioner.
5. Reduction of penalty by the Commissioner (Appeals).
6. Dispute regarding duty demand and penalty under Section 11A and 11AC.
7. Applicability of judgments cited by the appellant.
8. Final decision on setting aside the impugned order.

Analysis:

1. The appellant, a manufacturer of excisable goods, had taken Cenvat credit twice during a specific period. Upon discovery, they rectified the error by reversing the credit and paying the interest. The Asst. Commissioner issued a show cause notice demanding the wrongly taken credit, duty for non-inclusion of tooling cost, interest, and penalty. The Commissioner (Appeals) acknowledged the mistake as bona fide and reduced the penalty from Rs. 54,488 to Rs. 5,448.

2. The dispute arose regarding the duty demand of Rs. 3,94,806 for not including the tooling cost in exports. The Commissioner (Appeals) did not address this issue in the order. The appellate tribunal found that since the goods were exported under bond without duty payment, demanding duty under Section 11A was not applicable. Consequently, the tribunal set aside the duty demand, interest, and penalty imposed under Section 11AC.

3. The appellant argued that no penalty should be imposed, citing precedents like Rashtriya Ispat Nigam Ltd. and others. The tribunal agreed that the error in availing double Cenvat credit was unintentional, as confirmed by the Commissioner (Appeals). Considering the bona fide nature of the mistake, the tribunal exercised discretionary powers to condone such errors, in line with the judgments cited by the appellant.

4. Ultimately, the tribunal set aside the impugned order, allowing the appeal with any consequential relief. The decision highlighted the importance of considering the circumstances surrounding the errors made by the appellant and the applicability of relevant legal precedents in determining the outcome of the case.

Final Decision:
The tribunal set aside the impugned order, ruling in favor of the appellant and granting the appeal with any consequential relief.