2011 (8) TMI 530 - AT - Central Excise

Penalty under Section 11AC - if an assessee entertains a bonafide belief that he is entitled to avail credit, he cannot be found fault with - imposition of penalty in respect of credit availed on MS Channels, angles etc. cannot be sustained. Credit has been denied is on the supplies made by M/s. Reliance Industries Limited, 100% EOU, during the period from 30.12.2008 to 03.01.2009, credit was taken on 04.01.2009 in respect of five invoices issued by Reliance Industries - Reliance Industries were indeed paying duty and appellant was taking credit till Dec 2005. Another point that was submitted by the learned counsel that during the relevant period appellant had substantial amount of cenvat credit in their books of account and there was no need to avail wrong credit at all - It is noticed that as on 01.01.2009, appellant had a balance of cenvat credit of basic excise duty amounting to Rs. 33,16,254/- whereas, the credit taken on these five invoices is only Rs. 4,18,840/-.Therefore, it cannot be said that there was deliberate intention to boost the cenvat credit account - Therefore, taking note of the fact thatappellant had paid duty and interest as soon as the same was pointed out and before issue of show cause notice, this was a fit case for not issue of show cause notice under the provisions of Section 11A (2B) of Central Excise Act, 1944. As regards amount of Rs. 27,203/-, it is noticed from the invoice that invoice clearly shows that what was paid was basic customs duty and education cess separately - Appellant was an assessee and availing substantial amount as cenvat credit and it was a regular feature availing the cenvat credit as can be seen from the invoices received by them and further it is also to be taken note of that in respect of five invoices on where an amount of Rs. 4,18,840/- was involved also there was payment of basic custom duty but appellant had taken credit of only CVD - Therefore, it is quite clear that the wrong availment of credit is only in respect of that invoice amounts to suppression of facts - Therefore, in my view the appellant is not entitled to credit as regards amount of Rs. 27,203/- and penalty is imposable.

Summary

Issues:
1. Admissibility of credit on MS Channels, Angles, Beams, etc.
2. Denial of credit on supplies from a 100% EOU.
3. Admissibility of credit on basic customs duty and education cess.

Issue 1: The appellant availed credit on MS Channels, Angles, Beams, etc., based on invoices from a 100% EOU. The Tribunal's decision in Vandana Global Limited case was cited, arguing that the issue was settled against the appellant. The Commissioner contended that these items were not eligible for credit as they were used for building platforms, not as inputs or capital goods. The appellant argued that with conflicting decisions and the matter referred to a Larger Bench, penalty for suppression of facts was unwarranted. The Tribunal found that if an assessee believed in good faith they were entitled to credit, no penalty should apply.

Issue 2: Credit was denied on supplies from Reliance Industries Limited, a 100% EOU, due to discrepancies in invoices showing different duties. The appellant claimed it was a mistake, supported by past transactions with Reliance Industries and a substantial existing cenvat credit balance. The Tribunal noted the appellant's prompt payment of the disputed amount with interest upon notification by officers, indicating no intention to evade duty. As there was no suppression of facts, the Tribunal ruled in favor of the appellant, closing the issue.

Issue 3: An amount relating to basic customs duty and education cess was disputed. The Tribunal found that the appellant, an experienced Central Excise assessee, could not claim ignorance or mistake. The appellant had a history of availing cenvat credit and had taken credit only for CVD while paying basic customs duty. This selective credit availing amounted to suppression of facts, leading to the imposition of a penalty.

In conclusion, the Tribunal upheld the demand for cenvat credit with interest but set aside the penalty for certain credit amounts. The penalty for wrongful credit availed on a specific amount was upheld, while penalties for other amounts were either set aside or upheld based on the presence of suppression of facts.