2013 (2) TMI 591 - AT - Central Excise

Waiver of Pre-deposit - Stay Petition - Penalty under Rule 15 of CCR, 2004 - CENVAT Credit on the strength of photocopies of the invoices - Goods which were considered neither input nor the capital goods, availed 100% credit on the capital goods instead of availing 50% credit - Held that - Appellant is not disputing the in eligible CENVAT Credit availed by them and has reversed the same along with interest. It seems to be unwarranted as the appellant would not have any reason to utilize the amount as he has enough balance in CENVAT account. Therefore, penalty imposed on the appellant is unwarranted and needs to be set aside. In favour of assessee

Issues: Stay petition for waiver of pre-deposit of penalty under Rule 15 of CENVAT Credit Rules, 2004 read with Section 11AC of Central Excise Act, 1944; Dispute over ineligible CENVAT Credit; Penalty imposition and its validity.

Stay Petition for Waiver of Pre-Deposit of Penalty:
The Stay Petition was filed seeking a waiver of the pre-deposit of the penalty imposed by the adjudicating authority under Rule 15 of CENVAT Credit Rules, 2004 read with Section 11AC of Central Excise Act, 1944. The presiding judge noted that after hearing both sides, it was apparent that the appeal itself could be disposed of due to the narrow compass of the issue. Consequently, the Stay Petition was allowed for the waiver of the pre-deposit of the penalty amount, and the appeal was taken up for disposal.

Dispute Over Ineligible CENVAT Credit:
The core issue in this case revolved around the availing of ineligible CENVAT Credit by the appellant. The appellant had availed CENVAT Credit based on photocopies of invoices for goods that were neither inputs nor capital goods. Additionally, they had availed 100% credit on capital goods instead of the correct 50% credit and had miscalculated the credit amount for inputs received from a 100% Export Oriented Unit (EOU). Upon being alerted by the audit party, the appellant reversed the amount of CENVAT Credit availed and paid the interest, albeit not immediately. The appellant contended that there was no intention to avail ineligible credit, showcasing substantial credit in excess of Rs. 2 crores in their statutory books during the relevant period. The Departmental Representative reiterated the findings of the lower authorities but upon further review directed by the Tribunal, acknowledged that the appellant indeed had sufficient credit during the relevant period. The judge upheld the order of the first appellate authority, rejecting the appellant's appeal on merit concerning the ineligible CENVAT Credit availed.

Penalty Imposition and Its Validity:
Regarding the penalty imposed, the judge considered the appellant's substantial CENVAT Credit balance of over Rs. Two Crores at the time the in-eligible credit was pointed out by the audit party. Given this balance, the imposition of a penalty under Rule 15(2) of CENVAT Credit Rules, 2004 read with Section 11AC of Central Excise Act, 1944, appeared unjustified as the appellant had no reason to utilize the disputed amount due to the significant existing balance. Consequently, the judge found the penalty imposed on the appellant to be unwarranted and set it aside, allowing the appeal against the penalty. The penalty imposed by the adjudicating authority was overturned, and the appeal on this aspect was allowed.

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