2015 (10) TMI 770 - AT - Central Excise

CENVAT Credit - Invoices against which the cenvat credit availed shows the address of their Head Office whereas the cenvat credit was availed by one of the units - Penalty u/s 11AC - Held that - Appellants had taken cenvat Credit on the basis of invoices raised in the name of their Head Office. The said Cenvat Credit has been taken by one of their manufacturing unit. There is no allegation of double availment of the said Cenvat Credit by any other unit. It is also observed that the appellants had reversed the cenvat credit on being pointed out by the audit. The appellants have not seriously contested the necessity or correctness of reversal of the Cenvat Credit before the lower authorities. However, they are seriously contesting the levy of interest and penalty. On the issue of levy of interest, there are conflicting decisions by various Hon ble High Courts and different Benches of the Hon ble Tribunal - in this case the appellant had reversed the credit as soon as it was pointed out that they had wrongly availed the same and they had not utilised the Cenvat Credit so availed till the time of reversal of the same.Therefore, the decision of Hon ble Jurisdictional High Court relying upon the decision of the Hon ble Supreme Court on the very same issue is applicable in this case. We, therefore, hold that no interest is payable in the present case. On the issue of penalty under Section 11AC, it is seen that the same is not leviable as there were no intention to evade duty, as is evident from the facts of the case. - Demand set aside - Decided in favour of assessee.

Summary

Issues:
Demand of Cenvat Credit availed by one unit but invoiced to Head Office, interest payment, penalty under Section 11AC.

Analysis:
The case involved a dispute where the Revenue raised a demand on the appellants for wrongly availing Cenvat Credit due to invoices showing the Head Office address, although the credit was utilized by a different unit. The Adjudicating Authority confirmed the demand along with interest and penalty under Section 11AC. The appellants argued that they had reversed the credit before utilization upon audit notification, citing decisions by the Hon'ble Supreme Court and High Courts to support their stance. The Revenue, however, contended that the reversal only occurred post-audit intervention and disagreed with the appellants' arguments, presenting contrary decisions and emphasizing the risk of short levy due to the credit error.

The Tribunal noted that the appellants had indeed availed Cenvat Credit based on Head Office invoices for a manufacturing unit and had reversed it promptly upon audit detection, with no double availment alleged. While the appellants did not contest the necessity of reversal, they challenged the interest and penalty imposition. The Tribunal acknowledged conflicting decisions on interest levy but relied on the Hon'ble High Court of Gujarat's ruling that reversal before utilization equates to not taking credit, thus no interest is payable. Consequently, the Tribunal held that no interest was due in this case. Regarding the penalty under Section 11AC, it was deemed inapplicable as there was no intent to evade duty based on the facts presented.

In conclusion, the Tribunal set aside the interest demand under Rule 14 of the Cenvat Credit Rules 2004 and the penalty under Section 11AC of the Central Excise Act 1944, upholding the Order In Original with the specified modifications. The appeal was allowed under these terms.