2019 (7) TMI 1807 - AT - Central Excise

CENVAT Credit - inputs/capital goods - Corrugated sheet/Serrated Adjustable classifiable under Chapter 68 of the Central Excise Tariff Act - Credit reversed before issuance of SCN - Levy of interest - imposition of penalty u/r 15(2) of Cenvat Credit Rules 2004 read with Section 11AC of the Central Excise Act 1944 - HELD THAT - The appellant has already reversed the amount of cenvat credit before issuance of the show case notice. However they have not paid any interest on the same. Interest being a statutory liability is to be paid by the appellant as the Cenvat credit was wrongly availed by the appellant and the same is not in dispute at all. Penalty - HELD THAT - The disputed amount had been paid before the issuance of the show cause notice. Therefore the payment of duty in the instant case before issuance of the show cause notice is a sufficient compliance. Additionally the Revenue has not been able to prove beyond reasonable doubt the presence of fraud collusion willful misstatement or suppression of facts on the part of the appellant. Therefore imposition of penalty under Rule 15(2) read with section 11AC of the Act is unwarranted. The penalty imposed under Rule 15(2) of Cenvat Credit Rules 2004 read with Section 11AC of the Central Excise Act 1944 is set aside - Appeal allowed in part.

Summary

Issues:
1. Availment of CENVAT credit on items not classified as capital goods or input.
2. Demand of CENVAT credit along with interest and penalty.
3. Imposition of penalty under Rule 15(2) of Cenvat Credit Rules, 2004.

Analysis:
1. The appellant, engaged in manufacturing MS Billets and Non Alloy Steel Ingots, availed CENVAT credit on items not classified as capital goods or input under Rule 2(a) of the Cenvat Credit Rules, 2004. A show-cause notice was issued demanding the credit amount, interest, and penalty under Rule 15(2) of Cenvat Credit Rules, 2004 read with section 11AC of the Central Excise Act, 1944.

2. The Adjudicating Authority confirmed the demand, interest, and penalty. On appeal, the Commissioner (Appeals) upheld the decision. The appellant argued that they had already reversed the disputed amount from their Cenvat register and had not utilized it, thus interest and penalty should not apply. The Tribunal noted that the appellant had reversed the credit before the show-cause notice but had not paid interest, which is a statutory liability. The Tribunal found the availed credit was incorrect, thus interest was justified. However, as the disputed amount was paid before the notice, imposition of penalty was deemed unwarranted.

3. The Tribunal ruled that since the appellant had paid the disputed amount before the show-cause notice and there was no proof of fraud or willful misstatement, the penalty under Rule 15(2) of Cenvat Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944 was set aside. The appeal was partly allowed, and the penalty was removed based on compliance with payment before the notice and the absence of evidence of fraudulent intent.