2012 (2) TMI 396 - AT - Central Excise

Waiver of penalty prompt reversal of Modvat Credit of duty paid on angles and bars, used in the construction activities on intimation by department assessee contending it to be wrong Book Entry, corrected without utilizing the Cenvat credit - Held that - We find no malafide reasons on the part of respondents to avail the Modvat credit with a fraudulent intention. We accordingly agree with the appellate authority that penalty imposed upon respondents is required to be set aside Decided against the revenue.

Summary

Issues involved:
Dispute over Modvat Credit of duty paid on angles and bars used in construction activities, suppression of facts leading to demand confirmation and penalty imposition, challenge against suppression for penalty purposes only, availing Modvat Credit without fraudulent intention.

Analysis:
The dispute in this case revolves around the Modvat Credit of duty paid on angles and bars utilized in construction activities. The Department notified the respondents about the non-availability of Modvat Credit through a letter. The respondents promptly reversed the credit and paid interest on the amount. The Commissioner(Appeals) confirmed the duty demand and interest, citing suppression due to the failure to disclose information regarding the diversion of inputs for civil works. The Commissioner upheld the demand based on the Apex Court ruling and the failure to declare necessary information to the department. However, the Commissioner considered the prompt corrective actions of the respondents as a redeeming feature and decided not to impose a penalty.

The respondents filed Cross Objections challenging the findings of suppression only for the purpose of penalty imposition. They argued that there was no intention to evade duty as the availed credit was not utilized, and the wrong entry was promptly corrected without any fraudulent intent. The respondents highlighted that angles and bars were Modvatable items for them, and they regularly made entries in statutory records for availing Modvat Credit. The appellate authority noted the regular entries made by the appellants and the substantial unutilized credit in their account, far exceeding the duty involved in the appeal. Consequently, the appellate authority agreed that there were no malicious intentions on the part of the respondents and set aside the penalty imposed, ultimately rejecting the Revenue's appeal.

In conclusion, the judgment addresses the issues of Modvat Credit dispute, suppression of facts leading to demand confirmation and penalty imposition, and the availing of Modvat Credit without fraudulent intentions. The decision emphasizes the importance of prompt corrective actions by the respondents in reversing the credit and highlights the lack of malicious intent in availing the credit. The judgment ultimately upholds the setting aside of the penalty imposed on the respondents, based on the lack of fraudulent intentions and the substantial unutilized credit in their account.