2007 (10) TMI 54 - AT - Central Excise

Import through foreign post office Credit cannot be availed on basis of photocopy of bill of entry No any valid document shown to avail credit There is no allegation of fraud in the SCN Moreover monthly return duly submitted by appellant so penalty u/s 11AC is not sustainable

Summary

Issues: Denial of Cenvat credit based on photocopy of bill of entry for imported goods; Imposition of penalties and interest on the appellant.

Analysis:
1. The main issue in this case revolves around the denial of Cenvat credit to the appellant based on the photocopy of the bill of entry for imported goods. The appellant had availed the credit on the basis of a photocopy of the bill of entry, which was certified by customs officers. The adjudicating authority and the Commissioner (Appeals) concluded that the appellant could not avail the Cenvat credit and imposed penalties and interest.

2. Upon examining the provisions for availing Cenvat credit on the documents, it was found that the Central Excise Manual Supplementary instructions at Chapter IV specifically mention the requirement of a certificate issued by a customs appraiser for goods imported through a foreign post office. The procedures for availing Cenvat credit on goods imported through a foreign post office were prescribed by Circular No. 16/89-C.E., dated 1-6-1989. The circular mandates the importer to follow a specific procedure, including submitting an application expressing the intention to claim Modvat credit and obtaining a certificate in triplicate after duty payment.

3. The records indicated that the appellants did not follow the prescribed procedure or obtain the necessary certificate for availing Cenvat credit on goods imported through the foreign post office. In the absence of valid documents to support the Cenvat credit claim, the lower authorities' decision to deny the credit was deemed correct and did not require any intervention.

4. Regarding the penalties imposed on the appellant, it was observed that the appellants might have misunderstood the provisions. The penalty was imposed under Section 11AC of the Central Excise Act, 1944, for availing credit on photocopies of bills of entry from April 2000 to April 2001. However, there was no allegation of misstatement, suppression, fraud, or intention to evade duty payment in the show cause notice. The penalty was considered harsh, as the appellants were submitting monthly RT-12 returns during the relevant period, and the error could have been noticed during return scrutiny. Consequently, the penalty under Section 11AC was set aside as the necessary ingredients for its imposition were deemed absent in this case.

5. In conclusion, the appeal was partly allowed, with the denial of Cenvat credit upheld due to non-compliance with the prescribed procedures, while the penalty imposed on the appellants was set aside considering the absence of essential elements for penalty under Section 11AC.