2012 (6) TMI 395 - AT - Central Excise

Recovery of cenvat credit availed on shortages in quantity received in the factory of the appellant as the actual quantity received was less than what was indicated in the invoices appellant s claim that such shortages have taken place because of evaporation has to be accepted and he has allowed cenvat credit in all cases, where the shortage was less than 2% - Held that - As Commissioner (Appeals) himself has observed while taking a view that cenvat credit has to be reversed only in cases where short receipt is more than 2% as there does not seem to be any intention to evade duty as shortage happened due to evaporation or different methods of weighing no point of levying duty demand - when there is a clear observation that there is no intention to evade duty, extended period of limitation could not have been invoked and Commissioner has rightly not imposed penalty as the total amount involved in this case is less than Rs. 50,000/- the Tribunal need not to entertain the appeal -impugned order is set-aside and appeal is allowed in favour of assessee.

Summary

Issues:
Recovery of cenvat credit on shortages in quantity received, waiver of pre-deposit, imposition of penalty under Section 11AC of Central Excise Act, 1944, invocation of extended period of limitation, confirmation of demand, dismissal of appeal based on the amount involved.

Analysis:
The case involved a dispute regarding the recovery of cenvat credit on shortages in quantity received by the appellant's factory during a specific period. The appellant claimed that the shortages occurred due to evaporation or different methods of weighing. The Commissioner (Appeals) allowed cenvat credit where the shortage was less than 2% but directed the appellant to reverse the credit for shortages exceeding 2%, resulting in a demand of Rs. 38,250. The penalties imposed were set aside. The appellant challenged the confirmation of the demand and sought a waiver of pre-deposit.

The Tribunal, presided over by Mr. B.S.V. Murthy, decided to waive the pre-deposit requirement and proceeded to hear the appeal directly. The appellant's advocate argued that since the Commissioner (Appeals) acknowledged that there was no intention to evade duty and did not impose penalties under Section 11AC, the demand should not have been confirmed. The advocate contended that in the absence of intent to evade duty, penalties should not be imposed, and demands should not be sustained beyond the normal limitation period of one year.

The Revenue's representative argued that the amount involved was minimal (less than Rs. 50,000) and suggested that the appeal should not be entertained on this basis. However, after considering the arguments from both sides, the Tribunal disagreed with upholding the Commissioner (Appeals)'s order and rejected the notion that the appeal should be dismissed solely due to the amount involved.

Ultimately, the Tribunal set aside the impugned order, allowed the appeal, and disposed of the stay petition. The judgment highlighted the importance of considering intent in duty-related disputes and the significance of the limitation period in imposing demands and penalties under the Central Excise Act, 1944.