2013 (11) TMI 1179 - AT - Central Excise

Reversal of Cenvat credit irregularly availed Penalty under Rule 15 (2) r.w Section 11AC of the Central Excise Act - Waiver of Pre-deposit Held that - The applicant had already reversed the irregular credit and paid by cash with interest - Penalty to be imposed on irregular credit for clearance of goods and without sufficient balance in PLA - the applicant is directed to deposit a sum Rupees One lakh as pre-deposit Upon such submission rest of the duty to be waived till the disposal Partial stay granted.

Summary

Issues:
- Irregular availment of cenvat credit under Chapter 72 of Central Excise Tariff Act, 1985
- Re-crediting of the irregularly availed cenvat credit
- Disallowance and appropriation of cenvat credit along with interest and penalty
- Imposition of penalties for wrong availment of credit, suo moto credit, and violation of Central Excise Rules

Analysis:

1. The case involved the irregular availment of cenvat credit amounting to Rs.41,09,664/- by the applicant, who was engaged in the manufacture of iron and steel products. The Central Excise officers detected this irregularity during an audit, leading to the applicant informing the Asst. Commissioner of Central Excise about the irregular credit availed and subsequently reversing the entire credit along with interest.

2. The Asst. Commissioner directed the applicant to pay the amount from the Personal Ledger Account (PLA). However, the applicant informed that they had already paid the entire amount in cash through TR-6 challan and re-credited the amount in the cenvat account. A Show Cause Notice was issued proposing a demand of duty, disallowance of cenvat credit, and imposition of penalties under various provisions of the Central Excise Act.

3. The advocate for the applicant argued that the applicant had informed the Revenue of all facts during the material period, reversed the credit, and hence, should be eligible for re-credit. The advocate also contested the imposition of penalties, citing case laws and arguing that the penalty for alleged utilization of Rs.10,18,989/- was already included in the amount paid by cash.

4. The Ld. AR, representing the Revenue, reiterated the findings of the Commissioner (Appeals) and justified the demand of duty, disallowance of credit, and imposition of penalties. It was argued that there was no provision for the suo moto credit availment and that the penalties under section 11AC were justified due to the irregular credit utilization for clearance of goods without sufficient balance in the PLA.

5. Upon hearing both sides and examining the records, the tribunal found that the applicant had already reversed the irregular credit and paid in cash with interest. However, the tribunal agreed with the Ld. AR regarding the imposition of penalty for the irregular credit utilization for goods clearance without sufficient balance in the PLA. The applicant was directed to deposit a sum of Rs.1,00,000/- within six weeks towards penalty, with the pre-deposit of the balance amount of duty and penalty being waived during the appeal's pendency. Compliance was to be reported by a specified date.

This detailed analysis covers the issues of irregular cenvat credit availment, re-crediting, disallowance, penalties, and the tribunal's decision in the judgment.