2012 (12) TMI 928 - AT - Central Excise

Penalty - wrong availment of credit - whether these appellants are liable to pay penalty of Rupees one lakh each confirmed against them in the two Orders-in-Appeal - Held that - no detailed investigation has been conducted as to which goods were sent with invoices to receiving unit via. Dealer. of course it can be argued that this is not necessary, but it would have made offence case against appellants stronger. In any case, taking into account the fact that the recipients have paid the cenvat credit wrongly availed with interest, I find it fair to take a lenient view as submitted by the ld. Counsel. Accordingly penalty is reduced to Rs.15,000/- from Rs.1 lakh on each of the appellants in each appeal - Decided partly in favour of assessee.

Summary

Issues:
1. Availment of cenvat credit on the basis of invoices without actual receipt of inputs.
2. Liability to pay penalty confirmed in the Orders-in-Appeal.

Analysis:
1. The judgment involves an appeal against two separate orders, where the issue of availment of cenvat credit on the basis of invoices without actual receipt of inputs by the receiving units was common. The appellants, Smith Industries and Smith Cast & Forge, had paid up the cenvat credit with interest and a portion of the penalty. The appellants did not contest the charges, and the matter was considered final.

2. The primary issue was whether the appellants were liable to pay the penalty confirmed against them in the Orders-in-Appeal. The appellants did not contest the liability to penalty but argued that the penalty amount was harsh and should be reduced substantially. The tribunal considered this argument and decided to waive the requirement of pre-deposit, allowing the appeals to be taken for final decision.

3. The tribunal acknowledged the wrong availment of credit by the receiving units and the payment made towards it. The penalty imposed was deemed harsh considering the circumstances. The appellants' counsel argued that there was a lack of evidence regarding the actual removal of goods and highlighted the absence of specific rules during the relevant time. The counsel sought leniency due to the small amount of wrong credit availed, which had already been rectified.

4. Despite the absence of detailed investigation into the goods sent with invoices to the receiving unit via the dealer, the tribunal considered the payment made by the recipients and decided to take a lenient view. The penalty was reduced from Rs. 1 lakh to Rs. 15,000 on each appellant in each appeal, considering the circumstances and the amount involved.

This judgment showcases a fair and reasonable approach by the tribunal in addressing the issue of penalty imposition in cases of wrong availment of credit, emphasizing the importance of considering all relevant factors before making a decision.