2015 (3) TMI 34 - AT - Central Excise

Benefit of Cenvat credit scheme in terms of the Cenvat Credit Rules, 2004 - Availment of excess as well as short credit - Held that - excess credit availed as well as short credit availment occurred due to clerical error, we consider that the penalty need not have been imposed on the appellant. Such mistake should not have been continued for more than three years. Nevertheless, in the facts and circumstances of the case, we consider that the appellant does not deserve to be visited with penalty. Accordingly, while confirming the demand for Cenvat credit with interest, we set aside the penalty imposed on the appellant. - Decided partly in favour of assessee.

Summary

Issues: Challenge on imposition of penalty for wrongly availing Cenvat credit

In this judgment by the Appellate Tribunal CESTAT BANGALORE, the Appellant, a Large Tax Payer Unit (LTU), was engaged in the manufacture of various products and availed Cenvat credit under the Cenvat Credit Rules, 2004. The dispute arose when it was found that the Appellant had availed excess credit of more than &8377; 67 lakhs due to genuine mistakes in data entry and record maintenance by outsourced manpower. Simultaneously, the Appellant had also taken short credit of more than &8377; 32 lakhs during the same period, indicating no intention to avail inadmissible credit. The main issue was the imposition of penalty for the excess credit availed. The Appellant contended that the excess credit was a bona fide mistake, promptly rectified upon discovery, and thus, penalty imposition was unjustified.

The Tribunal, after considering the submissions and relevant case laws like Rollwell Forge Ltd. and Indo-Nippon Chemicals Co. Ltd., concluded that the penalty should not have been imposed on the Appellant. The Tribunal noted that the excess credit availed and short credit taken were due to clerical errors, and there was no intention to evade tax. Despite the mistake continuing for over three years, the Tribunal found that the circumstances warranted leniency. Therefore, the Tribunal confirmed the demand for Cenvat credit with interest but set aside the penalty imposed on the Appellant. The appeal was disposed of in favor of the Appellant, emphasizing that no penalty was justified in this case.