2007 (10) TMI 107 - AT - Central Excise

Ineligible credit availed on the inputs which were received short Debit notes for inputs received short were produced by assessee to audit party shows there was no malafide intention Moreover credit has been reversed along with interest Genuine mistake, so penalty u/s 11AC not imposable

Summary

Issues: Appeal against setting aside penalty under Section 11AC for availing ineligible Cenvat credit on inputs received short.

In this case, the Appellate Tribunal CESTAT, Mumbai, considered an appeal against the setting aside of a penalty imposed under Section 11AC by the Commissioner of Central Excise (Appeals), Pune. The Revenue contended that the respondent had availed ineligible Cenvat credit on inputs received short, which, if not pointed out by audit officers, could have been utilized for clearing finished goods, attracting Section 11AC. The respondent argued that raising debit notes indicated no suppression, and duty was promptly paid upon audit officers' notification, citing the judgment of the Hon'ble High Court of Bombay in a relevant case. The Tribunal noted that the respondent had indeed raised debit notes for inputs received short, promptly paid the duty upon notification of ineligibility, and reversed the amount with interest, indicating no intention to evade duty. The Tribunal upheld the Commissioner (Appeals)'s findings that there was no intent to evade duty, as evidenced by the immediate duty payment and lack of suppression allegations by the Department. The Tribunal concluded that the issue did not fall under Section 11AC due to the lack of intent to avail ineligible credit, citing the decision of the Hon'ble High Court in a relevant case and rejected the Revenue's appeal accordingly.