2014 (10) TMI 84 - AT - Central Excise

Availment of CENVAT Credit twice - Imposition of penalty - Held that - During the period Oct. 07 to Mar. 10, the applicant had availed Cenvat credit twice to the tune of ₹ 66,26,625/- on the basis of 113 nos. of input invoices. There is no dispute that the initial credit was taken on the basis of invoices marked with MRN . For the second time, they have taken credit on the basis of same invoices without any marking of Material Receipt No. Thus, it is apparent that the applicant had taken credit twice on the same invoices with or without MRN No. It is also noticed that the preventive officers during the verification of the records had detected continuous availment of Cenvat credit twice in some invoices such and, therefore, prima facie the contention of the learned Counsel that they have voluntarily deposited the tax cannot be accepted - Assessee has taken the credit twice on the basis of documents continuously for more than two years. Therefore, the facts of the said case would not be applicable herein. Applicant failed the make out a prima facie case for waiver of pre-deposit of the entire amount of penalty - stay denied.

Summary

Issues:
1. Irregular availment of Cenvat credit twice.
2. Imposition of penalty under Section 11AC of the Central Excise Act.
3. Contention of voluntary deposit by the applicant.
4. Dispute over the availing of credit on the same invoices with or without Material Receipt No.
5. Prima facie case for waiver of pre-deposit of penalty.

Analysis:
1. The applicants were involved in the manufacture of 'machined and rough Steel Castings' and availed Cenvat credit twice amounting to Rs. 66,38,538 based on 113 input invoices. The irregularity was detected during a verification by Preventive Officers, leading to the reversal of the credit along with interest. A show-cause notice was issued, and the Adjudicating authority confirmed the demand along with interest and imposed a penalty under Section 11AC of the Act.

2. The learned Counsel contested the penalty imposed under Section 11AC, arguing that the penalty was not warranted as the applicants had voluntarily paid the entire amount with interest upon self-detection before the show-cause notice. The double entry was attributed to a system error, with only two invoices detected by Preventive Officers. The Counsel relied on a Tribunal decision in a similar case to support their argument.

3. The Authorized Representative emphasized that the applicants deliberately availed credit twice on the same invoices, as evidenced by the absence of 'Material Receipt No.' on the second credit entries. Referring to a High Court decision, it was argued that invocation of Section 11AC was justified due to the continuous double availment of Cenvat credit.

4. Upon review, it was established that the applicants had indeed availed Cenvat credit twice on the same invoices, with or without 'Material Receipt No.' The continuous double availment was noted by Preventive Officers, indicating a deliberate act rather than voluntary deposit as claimed by the applicants.

5. Considering the arguments and precedents cited, the Tribunal found that the applicants failed to establish a prima facie case for waiving the pre-deposit of the penalty. Consequently, the applicants were directed to pre-deposit a sum of Rs. 5 lakhs within a specified timeframe to comply with the order.