2018 (3) TMI 1840 - AT - Central Excise

Levy of interest and penalty - reversal of already availed CENVAT credit - HELD THAT - Since in the instant case, the appellant had reversed the credit, interest cannot be levied - demand of interest set aside. Penalty - HELD THAT - There are no material on record indicating suppression of fact with intent to evade payment of duty and other ingredients as mentioned under Section 11AC of the Central Excise Act, 1944. Therefore, imposition of penalty is unwarranted. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Disallowance of cenvat credit on imported goods.
2. Imposition of penalty on the company and managing director.
3. Appropriation of reversed amount.
4. Appeal against the Commissioner (Appeals) order.

Issue 1: Disallowance of Cenvat Credit on Imported Goods:
The appellant, engaged in manufacturing stainless steel products, imported unfinished stainless steel pipes and availed cenvat credit. However, the Anti-evasion unit found discrepancies, leading to a show cause notice disallowing the cenvat credit of ?32,20,240. The adjudicating authority upheld the disallowance, imposed penalties, and appropriated an amount. The Commissioner (Appeals) partly allowed the appeal, adjusting the appropriated amount. The appellant argued that since the credit was reversed, interest cannot be levied under Rule 14 of Cenvat Credit Rules, 2004. The Tribunal agreed with this argument and allowed the appeal, finding no suppression of facts to evade duty.

Issue 2: Imposition of Penalty on the Company and Managing Director:
The adjudicating authority had imposed penalties on the company and the managing director under Section 11AC of the Central Excise Act, 1944. The Commissioner (Appeals) upheld the penalty on the managing director but partly allowed the appeal of the company. The Tribunal, after considering the arguments, found no evidence of suppression of facts with intent to evade duty. Consequently, the imposition of penalties was deemed unwarranted, and the appeal by the appellant was allowed.

Issue 3: Appropriation of Reversed Amount:
The Commissioner (Appeals) had ordered the appropriation of a specific amount, which the appellant had reversed, against the demand of cenvat credit. The Tribunal noted this adjustment and modified the amount to be appropriated, aligning it with the appellant's reversal. This adjustment was a key aspect of the appeal, and the Tribunal's decision reflected a fair consideration of this issue.

Issue 4: Appeal Against the Commissioner (Appeals) Order:
The appeal before the Tribunal stemmed from the Commissioner (Appeals) order that partly allowed the appellant company's appeal but rejected the managing director's appeal. The Tribunal's detailed analysis and consideration of the arguments presented by both sides led to a decision in favor of the appellant, overturning the penalties imposed and disallowance of cenvat credit. The Tribunal's ruling highlighted the importance of adherence to legal provisions and the absence of evidence supporting penalty imposition.