2014 (1) TMI 326 - AT - Central Excise

Waiver of pre-deposit of penalty under Rule 15(2) of CENVAT Credit Rules, 2004 r.w. Section 11 AC of the Central Excise Act, 1944 CENVAT credit availed on input and input service used in the generation of electricity - Held that - The applicant availed the credit on the inputs, input services and capital goods used in the generation of electricity and partly used the same for the non-duty paid finished goods - The audit party during the verification of records detected the irregularity of availment of the credit - The applicant reversed the entire credit along with interest immediately upon detection by the audit party - Prima facie, the deposit of duty and interest is sufficient for waiver of pre-deposit of penalty - Pre-deposit of penalty waived till the disposal Stay granted

Summary

Issues: Waiver of pre-deposit of penalty under Rule 15(2) of CENVAT Credit Rules, 2004 read with Section 11 AC of the Central Excise Act, 1944.

The judgment revolves around the application for waiver of pre-deposit of penalty amounting to Rs.3,08,823 imposed on the applicant under Rule 15(2) of CENVAT Credit Rules, 2004 read with Section 11 AC of the Central Excise Act, 1944. The applicant, engaged in sugar manufacturing, availed CENVAT credit on input, input service, and capital goods used in electricity generation, allegedly using it for non-duty paid finished goods. The Central Excise audit party detected this irregularity during record verification. The applicant promptly reversed the entire credit upon detection. The adjudicating authority imposed the penalty under Section 11AC. The applicant argued no suppression of facts and that all transactions were recorded. The respondent contended that the irregularity was detected by the audit party, emphasizing that if not detected, the amount would not have reached the Government Exchequer, citing relevant Supreme Court decisions.

The judge found that the applicant indeed availed credit on inputs, input services, and capital goods for electricity generation, partly using it for non-duty paid finished goods. The audit party detected the irregularity, leading to the applicant reversing the credit immediately. The judge, prima facie, considered the deposit of duty and interest sufficient for waiving the pre-deposit of penalty. Consequently, the judge granted the waiver of pre-deposit of penalty and stayed the recovery during the appeal's pendency. The stay application was allowed, and the decision was dictated and pronounced in open court.