2015 (10) TMI 1932 - AT - Central Excise

MODVAT Credit - Goods received after few days - Credit reversed before SCN - Held that - Larger Bench of the Tribunal in the case of Machino Montell 2004 (4) TMI 101 - CESTAT, NEW DELHI stands reversed by the Hon ble High Court but nevertheless I am of the view that it is not the case of the mala fide on the part of the respondents so as to impose any penalty upon them. Admittedly, the mistake was detected by the assessee himself and in any case, the Cenvat credit was available to them and the only issue is timing of availment of such credit. The assessee has also deposited the interest involved on such wrongly availment of credit. As such, I agree with the Commissioner (Appeals) that this being not a case of any mala fide, imposition of penalty upon the respondents is not justified. Accordingly, Revenue s appeal is rejected. - Decided against Revenue.

Summary

Issues: Appeal against order passed by Commissioner (Appeals) regarding imposition of penalty for delayed entry of goods and availing Modvat credit.

Analysis:
1. Issue of Delayed Entry of Goods and Availing Modvat Credit:
The appellant received goods but took Modvat credit based on the Bill of entry before the goods physically entered the factory gate, leading to a procedural mistake of delayed entry. However, the mistake was rectified by the appellant before any show cause notice was issued, and the duty was deposited along with interest. The Tribunal noted that there was no mala fide intention on the part of the appellant and that the mistake was self-detected. The Tribunal referred to the decision in the case of M/s. Rashtriya Ispat Nigam Ltd. and M/s. Machino Montell to support the view that no penalty should be imposed in the absence of any evasion of duty or intent to evade duty. The Tribunal agreed with the Commissioner (Appeals) that since it was not a case of mala fide, the imposition of penalty was not justified, and the appeal by Revenue was rejected.

2. Reversal of Larger Bench Decision:
The Tribunal acknowledged that the decision of the Larger Bench in the case of Machino Montell had been reversed by the Hon'ble High Court. Despite this reversal, the Tribunal emphasized that the absence of mala fide intent on the part of the appellant was crucial in determining the imposition of penalties. The self-detection of the mistake by the appellant, coupled with the timely rectification and payment of interest, further supported the Tribunal's decision to reject the appeal by Revenue. The Tribunal's analysis focused on the absence of fraudulent behavior and the corrective actions taken by the appellant, leading to the conclusion that penalty imposition was unwarranted in this case.

In conclusion, the judgment by the Appellate Tribunal CESTAT NEW DELHI dealt with the issue of delayed entry of goods and availing Modvat credit, emphasizing the lack of mala fide intent by the appellant and the corrective measures taken. The decision highlighted the importance of self-detection of errors, timely rectification, and payment of interest in determining the imposition of penalties for procedural mistakes in duty availing processes. The Tribunal's thorough analysis led to the rejection of Revenue's appeal, underscoring the significance of intent and corrective actions in penalty considerations in such cases.