2015 (6) TMI 470 - AT - Central Excise

CENVAT credit - Penalty u/s 11AC - Held that - Commissioner (Appeals) observed that the appellant had admitted their mistake and willingly reversed the CENVAT credit alongwith interest. The appellant had not challenged the same before the original authority and has raised objection only on imposition of penalty. - appellant debited cenvat credit alongwith interest and intimated the Central Excise officer on 02.3.2005 and therefore, they requested to drop the show cause notice. The Section 11A (2B) of the Central Excise Act, 1944 provide that where any duty of excise has not been levied or paid or has been short levied or short paid, the person chargeable with the duty, may pay the amount of duty on the basis of his own ascertainment of such duty or on the basis of duty ascertained by a Central Excise officer before service of notice on him under sub-Section (1) in respect of the duty so paid and inform the Central Excise officer of such payment in writing, who on receipt of such intimation shall not serve any notice under Section 11A(1) in respect of the amounts so paid. In the present case, it is found that the appellant had paid the duty alongwith interest as per the amount ascertained by CERA audit and requested to drop the show cause notice. - penalty imposed under Section 11AC is set-aside - Decided in favour of assessee.

Summary

Issues:
1. Availing CENVAT credit on the basis of incorrect documents.
2. Imposition of penalty under Section 11AC of the Central Excise Act, 1944.
3. Contesting the demand of CENVAT credit.

Analysis:

Issue 1: Availing CENVAT credit on the basis of incorrect documents
The appellants were availing CENVAT credit on inputs based on the Original for Buyers copy instead of the required Duplicate for Transporter copy. This led to a discrepancy during a CERA audit, where it was noted that the appellants were not eligible to avail CENVAT credit. The appellants debited the amount in question and informed the Range Superintendent accordingly. The show cause notice was issued proposing a demand for CENVAT credit along with interest and penalty.

Issue 2: Imposition of penalty under Section 11AC
The adjudicating authority confirmed the demand for CENVAT credit along with interest and imposed a penalty equal to the amount of the CENVAT credit under Section 11AC of the Central Excise Act, 1944. The Commissioner (Appeals) modified the order, granting a reduced penalty under Section 11AC. The appellant contested the demand of CENVAT credit, citing relevant Tribunal decisions that supported their position. The Revenue argued that the penalty was rightfully imposed as the appellant knowingly availed irregular CENVAT credit.

Issue 3: Contesting the demand of CENVAT credit
The appellant argued that they contested the demand of CENVAT credit before the adjudicating authority, contrary to the Commissioner (Appeals)'s observation. The appellant had voluntarily reversed the CENVAT credit along with interest and requested the show cause notice to be dropped. The Tribunal found that the appellant had indeed paid the duty along with interest as per the amount ascertained by the audit, and thus the show cause notice could not be sustained. The Tribunal also disagreed with the lower authorities' findings that the appellant's actions were not a bonafide clerical error, citing relevant case laws supporting the appellant's position.

In conclusion, the Tribunal set aside the penalty imposed under Section 11AC, allowing the appeal filed by the assessee and rejecting the appeal filed by the Revenue.