2015 (10) TMI 789 - AT - Central Excise

Levy of penalty u/s 11AC read with Rule 15 - Availment of inadmissible CENVAT Credit was reversed on pointing out by the department - Held that - Where the duty is determined under Section 11A(2), the penalty under Section 11AC can be imposed. In the present case there was neither any show cause notice nor any adjudication order in respect of payment of cenvat amount of ₹ 4,38,508/- by the appellant. Therefore, this amount has not been determined under Section 11A (2). Consequently, in my considered view, the penalty under Section 11AC cannot be imposed in the present case. I, therefore, set aside the penalty imposed under Section 11AC read with Rule 15 of the Cenvat Credit Rules, 2004 - interest is chargeable from the date of credit taken in the cenvat account by the appellant irrespective of the fact that the said credit was not utilized. Therefore, the interest under Section 11AB demanded by the lower authority and upheld by the Commissioner (Appeals) is maintained. - Decided in favour of assessee.

Summary

Issues:
- Appeal against penalty under Section 11AC and interest under Section 11AB upheld by Commissioner of Central Excise (Appeals)
- Appellant availed inadmissible cenvat credit, reversed it, and paid interest
- Show cause notice issued for penalty under Section 11AC and interest under Section 11AB
- Appellant's argument of inadvertent credit availing and non-utilization
- Revenue's contention of suppressed facts and extended period invocation
- Interpretation of Section 11AC for penalty imposition
- Interest chargeable from the date of credit taken irrespective of utilization
- Decision on two separate appeals regarding penalty and interest demands

Analysis:
The case involved appeals against penalties under Section 11AC and interest under Section 11AB imposed by the Commissioner of Central Excise (Appeals). The appellant, M/s. Force Motors Ltd., Pune, had inadvertently availed inadmissible cenvat credit, which was reversed upon departmental notice, and interest was paid. A show cause notice was issued for the penalty under Section 11AC and interest under Section 11AB. The appellant argued that the credit was availed inadvertently and not utilized, thus penalty under Section 11AC should not apply. The Revenue contended that the appellant suppressed facts and the extended period was rightly invoked.

In the interpretation of Section 11AC, it was noted that the penalty could only be imposed when the duty is determined under Section 11A(2). Since there was no determination under Section 11A(2) for the cenvat amount in question, the penalty under Section 11AC was set aside. However, the interest under Section 11AB was upheld based on the Supreme Court's judgment that interest is chargeable from the date of credit taken, regardless of utilization.

Regarding the two appeals, in one case, where the duty was not determined under Section 11A(2), the penalty under Section 11AC was set aside, while interest was maintained. In the other case, where the duty was determined under Section 11A(2), the penalty and interest were rightly imposed. Consequently, one appeal was partly allowed, and the other was dismissed. The judgment was pronounced on May 7, 2015.