2015 (3) TMI 129 - AT - Central Excise

Availment of CENVAT Credit - Penalty u/s 11AC - Suppression of facts - benefit under Section 11A(2B) - Held that - Admittedly there is no contumacious conduct or fraud on part of the appellant and further the appellant has paid the duty with interest under intimation before the issue of show-cause notice. As they have deposited the tax and interest in question on 17.12.2009, whereas the show-cause notice was issued on 27.4.2011 i.e. after more than 18 months of such deposit and intimation given by the appellant. Thus, I hold that the appellant is entitled to the benefit under sub-section 2B of Section 11A of the Central Excise Act. Thus, the appeal is allowed in favour of the appellant and impugned order is set aside. - Decided in favour of assessee.

Summary

Issues:
1. Availment of CENVAT Credit twice on the same Bill of Entry.
2. Imposition of penalty under Rule 15(2) of Cenvat Credit Rules, 2004 read with Section 11AC of the Central Excise Act.
3. Applicability of Section 11A(2B) in the case of short payment of duty.

Analysis:

Issue 1: Availment of CENVAT Credit twice on the same Bill of Entry
The appellant, engaged in manufacturing pharmaceutical products, availed credit of duty paid on inputs, capital goods, and input services under the Cenvat Credit Rules, 2004. An audit revealed that the appellant had availed CENVAT Credit twice on the same Bill of Entry, amounting to Rs. 2,83,072. Upon notification by the department, the appellant acknowledged the error and repaid the excess credit with interest. The department issued a show-cause notice proposing to appropriate the amount paid and impose a penalty under Rule 15(2) of Cenvat Credit Rules, 2004 read with Section 11AC of the Central Excise Act.

Issue 2: Imposition of penalty under Rule 15(2) of Cenvat Credit Rules, 2004
The show-cause notice led to an Order-in-Original confirming the demand, interest, and imposing a penalty equal to the excess credit availed. The appellant appealed to the Commissioner (Appeals), who upheld the decision. The appellant contended that the double credit was a bona fide mistake, promptly rectified upon notification by the Revenue. The appellant argued for the benefit under Section 11A(2B), which allows payment of duty with interest before the issuance of a notice, barring cases of fraud or collusion.

Issue 3: Applicability of Section 11A(2B) in case of short payment of duty
The Tribunal found no evidence of fraudulent conduct by the appellant and noted that the duty and interest were paid before the show-cause notice was issued, entitling the appellant to the benefit under Section 11A(2B) of the Central Excise Act. As the notice was served more than 18 months after the payment, the Tribunal ruled in favor of the appellant, setting aside the impugned order and allowing the appeal with any consequential benefits.

This judgment highlights the importance of timely rectification of errors, the applicability of relevant sections for duty payment, and the need for clear allegations in show-cause notices to establish misconduct.