2013 (1) TMI 168 - AT - Central Excise

Excess/ wrong Cenvat Credit - inputs and input services with the invoices not in the name of the appellant - Commissioner upheld the demand for cenvat credit but set-aside the interest levy and reduced the penalty to Rs. 25,000/- from Rs. 1,53,138/- - Held that - As decided in Rangdhara Polymers 2013 (1) TMI 96 - GUJARAT HIGH COURT Circular issued by the Board prescribing monetary limit for filing appeal by the Revenue, was issued before the date on which the appeal comes up for consideration before the Court, the monetary limit prescribed in the Circular would apply. Also as decided in Stovec Industries Limited 2013 (1) TMI 72 - GUJARAT HIGH COURT since the Board itself had directed the lower authorities not to file an appeal before the Tribunal for an amount of less than Rs.1,00,000/- vide the circular dated 20.10.10, the appeal filed by the Revenue is dismissed - appeal of revenue for enhancement of penalty cannot be allowed. Demand for CENVAT Credit, interest and imposition of penalty - assessee appeal - Held that - As decided in case of Ind-Swift Laboratories Ltd. 2011 (2) TMI 6 - SUPREME COURT interest has to be paid even if credit has not been utilised. Therefore, assessee has not made out a case for waiver of interest and demand for interest has to be upheld. Penalty - Held that - The appellant had substantial amount of credit in their account and it was their submission that dealing assistant of the assessee made a mistake and because of the mistake, wrong credit was taken and there was apparently no intention to do so. In view of the case of Ashoka Metals Dicor (P) Limited 2010 (4) TMI 738 - ALLAHABAD HIGH COURT has held that where the credit has not been utilised, there cannot be any payment of duty without there being sufficient balance and therefore, no penalty is leviable. Respectfully following the decision of the Hon ble High Court mentioned above, the penalty of Rs. 25,000/- imposed on the appellant is set-aside.

Summary

Issues involved:
1. Availing excess/wrong credit under Cenvat Credit Rules, 2004.
2. Appeal by Revenue regarding monetary limit for filing appeal.
3. Demand for interest and imposition of penalty on the assessee.

Analysis:

Issue 1: Availing excess/wrong credit under Cenvat Credit Rules, 2004
The appellant was found to have availed excess/wrong credit amounting to Rs. 3,97,595 on inputs and input services not in their name. The audit officers observed this during an audit under EA-2000. The appellant reversed the said credit during the audit. Subsequently, proceedings were initiated resulting in the confirmation and appropriation of the wrongly availed Cenvat credit. The adjudicating authority demanded interest and imposed a penalty. On appeal, the Commissioner upheld the demand for Cenvat credit but set aside the demand for interest and reduced the penalty. The Revenue appealed against this decision, and the respondent filed a cross objection. The Tribunal dismissed the Revenue's appeal based on the High Court's view that if the Circular of the Board was in force on the date of appeal consideration, the appeal must be dismissed. Therefore, the enhancement of penalty sought by the Revenue was not allowed.

Issue 2: Appeal by Revenue regarding monetary limit for filing appeal
The Revenue filed an appeal against the decision, arguing that the appeal was filed before the Circular prescribing the monetary limit for filing appeals came into force. However, the Tribunal, following the High Court's decisions, dismissed the Revenue's appeal, stating that if the Circular was in force on the date of appeal consideration, the appeal had to be dismissed. Therefore, the enhancement of penalty sought by the Revenue was not allowed.

Issue 3: Demand for interest and imposition of penalty on the assessee
Regarding the demand for interest, the Tribunal referred to a Supreme Court decision stating that interest had to be paid even if the credit was not utilized. Therefore, the demand for interest was upheld. However, based on the High Court's decision that no penalty is leviable if the credit has not been utilized, the penalty imposed on the appellant was set aside. The Tribunal followed the High Court's decision, emphasizing that without sufficient balance, no duty payment could be made, and hence, no penalty was applicable. Both the appeals filed by the assessee and the Revenue, along with the cross objection, were disposed of accordingly.

This detailed analysis of the judgment covers the issues involved comprehensively, outlining the arguments presented, the legal principles applied, and the final decisions made by the Tribunal.