2015 (10) TMI 1552 - AT - Central Excise

Denial of CENVAT Credit - Penalty u/s 11AC - Held that - In the show cause notice itself allegation against the appellant is that they have taken the excess Cenvat credit wrongly. If appellant has taken cenvat credit wrongly, it means that he have taken the cenvat credit by mistake not with intention to take inadmissible cenvat credit. When show cause notice itself is alleging that appellant has taken cenvat credit wrongly and same has been supported by earlier audit. When the facts of wrong availment of credit was pointed out to the appellant they reversed the excess cenvat credit availe by them. In these circumstances, I hold that extended period of limitation is not invokable relying on the decision of Tribunal in the case of Yashwant Industries (2011 (1) TMI 997 - CESTAT, MUMBAI) - for the period the appellant has reversed the excess cenvat credit availed along with interest. As allegation against the appellant is that they have taken cenvat credit wrongly, it means that they have taken the cenvat credit by mistake. In these circumstances, penalty under Rule 15 of the Cenvat Credit Rules, 2004 read with Section 11 AC of the Central Excise Act is not imposable. - Impugned order is set aside - Decided in favour of assessee.

Summary

Issues:
Appeal against demand for wrong availment of cenvat credit under Rule 3(7) of Cenvat Credit Rules, 2004.

Analysis:
1. The appellant, a manufacturer of HDPE Fabric/bags, appealed against the demand for wrong availment of cenvat credit from M/s. Reliance Industries Ltd. The show cause notice alleged that the appellant wrongly took cenvat credit during June 2007 to April 2009, not as per the prescribed formula under Rule 3(7) of Cenvat Credit Rules. The excess cenvat credit was denied, and the appellant paid the credit within the limitation period. The issue was whether the extended period of limitation was correctly invoked.

2. The appellant argued that the audit teams had conducted multiple audits, pointing out the error in cenvat credit availed. The appellant promptly reversed the credit upon identification of the mistake. The appellant contended that the extended period of limitation should not apply, citing precedents like CCE vs. Yashwant Industries and Rajasthan State Warehouse Corpn vs. CCE Jaipur to support their case.

3. The respondent opposed, stating that the appellant was aware of the incorrect cenvat credit availed. The respondent requested an adjournment to examine the records provided by the appellant. However, the Bench proceeded with the case, considering the submissions and the show cause notice.

4. The Tribunal analyzed the case, noting that the appellant had taken the excess cenvat credit mistakenly, not intentionally. The Tribunal relied on the decision in CCE vs. Yashwant Industries to determine that the extended period of limitation was not applicable. As the appellant had already reversed the excess credit with interest, the penalty under Rule 15 of Cenvat Credit Rules, 2004, along with Section 11 AC of the Central Excise Act, was deemed inapplicable.

5. Consequently, the impugned order was set aside, and the appeal was allowed with any consequential relief. The judgment emphasized the distinction between mistaken availment of cenvat credit and intentional wrongdoing, leading to the decision in favor of the appellant.