2018 (10) TMI 1761 - AT - Central Excise

Recovery of CENVAT Credit - imposition of penalty u/s 11AC of Central Excise Act, 1944 read with rule 15 of the CENVAT Credit Rules, 2004 - HELD THAT - In AJINKYA ENTERPRISES VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE-III 2013 (6) TMI 610 - CESTAT MUMBAI the Tribunal has examined various judicial rulings to arrive at the conclusion that the duty paid by the appellants has been accepted by the department which is admittedly more than the CENVAT Credit availed by the appellants. Therefore, the appellants are not required to reverse the credit - Appeal allowed - decided in favor of appellant.

Summary

Issues: Disallowance of CENVAT credit and imposition of penalty under section 11AC of Central Excise Act, 1944.

Analysis:
1. The appeal was filed against an order disallowing CENVAT credit of ?53,86,781 and imposing a penalty under section 11AC of the Central Excise Act, 1944. The appellant had imported 'CARTAP Hydrochloride Technical' and cleared it without manufacturing, paying appropriate central excise duties. The appellant argued that since the subsequent payment of central excise duty on clearance of goods not manufactured would reverse the ineligible CENVAT credit, no further proceedings should be taken against them, citing the Tribunal's decision in Ajinkya Enterprises v. Commissioner of Central Excise, Pune-II.

2. The Authorized Representative supported the original authority's findings and urged acceptance of the impugned order. In Ajinkya Enterprises, the Tribunal concluded that the duty paid by the appellants exceeded the CENVAT credit availed, thus no reversal of credit was required. Following this precedent, the Tribunal set aside the impugned order and allowed the appeal, in line with the decision approved by the Hon'ble High Court of Bombay.