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2013 (1) TMI 505 - AT - Central ExciseWaiver of Pre deposit Intent to evade payment of duty - Wrongly CENVAT credit of CVD - Import one machine, Product Screen Separator Drive from their group company - Declare the value of the machine as Rs. 13,93,827/- Chartered Engineer ascertained the assessable value as Rs. 49,02,861/- The same was also admitted by the importer - Penalty u/s 112(a) of the Customs Act, 1962 - Importer admitted the duty liability, approached the Settlement Commission for getting immunity from penalties - Settlement Commission gave immunity from the penalties - Importer firm was taken over from the applicants, therefore, the applicants took the CENVAT credit of CVD paid by the importer Whether the CVD was paid on detection by the Customs, therefore, applicants are not entitled to take CENVAT credit of CVD paid by the importer as per Rule 9(1)(b) of the CENVAT Credit Rules, 2004 Held that - The Penalty u/s 114A of the Customs Act, 1962 is leviable for demand of additional amount of duty on account of fraud, collusion, willful mis-statement, suppression of facts and nonpayment of duty with an intent to evade payment of duty and on that amount credit is not available as per Rule 9(1)(2) of the CENVAT Credit Rules, 2004. In this case, no additional amount of duty has also been confirmed against the applicants, therefore, prima facie, the applicants are entitled to take CENVAT credit. Therefore, they have made out a case of 100% waiver of pre-deposit
Issues:
Waiver of pre-deposit of demanded amount due to wrong availment of CENVAT credit of CVD paid by the applicants. Analysis: The case involved the applicants seeking a waiver of pre-deposit of Rs. 11,58,012/- demanded for wrongly availing CENVAT credit of CVD paid. The dispute arose when the Customs authorities doubted the declared value of an imported machine, leading to a show-cause notice for misdeclaration of value to evade duty. The duty demanded included a component of Rs. 11,58,012/- as CVD, which the applicants took as CENVAT credit. The issue centered on whether the applicants were entitled to the credit under Rule 9(1)(b) of the CENVAT Credit Rules, 2004, considering the penalty proposed under Section 112(a) of the Customs Act, 1962. The Settlement Commission had granted immunity from penalties, but the lower authorities confirmed the demands, prompting the appeal for waiver of pre-deposit. The applicants argued that as the penalty was not proposed under Section 114A of the Customs Act, 1962, which deals with fraud, collusion, and intent to evade duty, they were entitled to the CENVAT credit. They contended that Rule 9(1)(b) restricts credit only in cases of fraud, collusion, willful mis-statement, and suppression of facts to evade duty, which were not applicable in their situation. The applicants maintained that since no additional duty was confirmed against them, they had correctly taken the credit, making the demands unsustainable. On the other hand, the Departmental Representative contended that the applicants' misdeclaration of the goods' value to evade duty disqualified them from claiming the credit under Rule 9(1)(b) of the CENVAT Credit Rules, 2004. The contention was that any suppression of facts regarding the value of the goods rendered the applicants ineligible for the credit. After hearing both sides, the Tribunal found that as no additional duty was confirmed against the applicants and the penalty was not under Section 114A of the Customs Act, 1962, they were prima facie entitled to the CENVAT credit. The Tribunal noted that Rule 9(1)(b) restricts credit only in cases of fraud, collusion, willful mis-statement, and suppression of facts to evade duty, which did not apply in this scenario. Consequently, the Tribunal granted 100% waiver of pre-deposit for the entire amount of duty, interest, and penalty, staying the recovery during the appeal's pendency.
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