2012 (5) TMI 298 - AT - Central Excise

Waiver of pre-deposit of penalty - appellant has availed inadmissible credit of the basic custom duty and special additional customs duty which they were not entitled to take - appellant submits that the appellant are public sector undertaking and there is no intention of the appellant to evade payment of duty or to take inadmissible CENVAT credit Held that - appellant is not entitled to take CENVAT credit on basic excise duty and special additional customs duty which they have availed without any authority of law, option given to the appellant to pay 25% of duty as penalty within 30 days of the communication of this order, appeal as well as stay application are disposed of

Summary

Issues:
- Imposition of penalty under Section 11AC of the Central Excise Act, 1944 for availing inadmissible credit of basic custom duty and special additional customs duty.

Analysis:
The case involved a public sector undertaking that had mistakenly availed inadmissible credit of basic custom duty and special additional customs duty. The central issue was whether the penalty under Section 11AC of the Central Excise Act, 1944 was applicable in this scenario. The appellant argued that there was no intention to evade duty, attributing the error to a lack of knowledge by a billing clerk. On the other hand, the department contended that the appellant, being a public sector undertaking, should have exercised more diligence in claiming credits they were not entitled to. The Tribunal, after hearing both sides, concluded that the appellant was not authorized to claim the CENVAT credit in question. Consequently, the appellant was held liable for penalty equal to the duty amount.

The Tribunal noted that the lower authorities had not provided the appellant with the option to pay 25% of the duty as penalty, as allowed under Section 11AC. Citing a precedent, the Tribunal granted the appellant 30 days to pay the reduced penalty amount. Failure to do so within the stipulated time would result in the appellant being liable to pay the full duty amount. The judgment highlighted the importance of complying with the provisions of the Central Excise Act, emphasizing the need for diligence, especially by entities like public sector undertakings, in adhering to the prescribed rules and regulations. The appeal and stay application were disposed of with these directions, providing clarity on the penalty imposition and payment terms.