2015 (10) TMI 1633 - AT - Central Excise

Penalty u/s 11AC - Credit taken on twice documents - Held that - Appellant is a large tax paying unit and what had happened was a bona fide mistake and the fact that appellant had paid the money immediately after detection would show that there was no intention to evade duty. It cannot be said that appellant has suppressed the facts since the fact of availment of Cenvat credit invoice-wise and document-wise is not required to be provided. Therefore penalty could have been imposed by invoking Section 11AC of Central Excise Act, 1944 only if there was an intention to evade duty. Nowhere such evidence had been brought out. The statement of the Manager-Excise recorded immediately clearly reveals that what had happened was a bona fide mistake and happened because of large number of documents and manual maintenance of accounts - mandatory penalty imposed on the appellant is set aside - Decided in favour of assessee.

Summary

Issues:
1. Double credit taken on the same document during 2005-2006.
2. Imposition of penalty under Rule 15(2) of Cenvat Credit Rules, 2004 read with Section 11AC of Central Excise Act, 1944.

Analysis:
1. The officers found instances of double credit taken on the same document by the appellants during 2005-2006. The Manager-Excise of the appellant admitted to these instances, attributing them to bona fide mistakes due to manual record maintenance and a large volume of documents. Despite the appellant's prompt payment with interest before the show-cause notice, proceedings were initiated, resulting in the confirmation of demand, appropriation of amounts paid, and the imposition of an equal penalty under Rule 15(2) of Cenvat Credit Rules, 2004 read with Section 11AC of Central Excise Act, 1944.

2. The appellant contended that the mistakes were unintentional, as evidenced by the immediate payment post-detection, indicating no intention to evade duty. The appellant argued that there was no evidence of intent to evade duty, as the requirement to provide Cenvat credit invoice-wise and document-wise was not breached. The Manager-Excise's statement supported the claim of a bona fide mistake caused by manual record-keeping and a high document volume. The tribunal acknowledged the appellant's position, noting the absence of evidence indicating an intent to evade duty. Consequently, the mandatory penalty imposed on the appellant was set aside, and the appeal was allowed.