2016 (7) TMI 349 - AT - Central Excise

Cenvat Credit - discrepancy in duty paying documents - levy of interest and penalty - appellant on his own reversed the credit inadvertently availed - extended period of limitation - Held that - appellant has specifically taken the ground that he has sufficient document to prove that he has rightly availed the credit but at the instance of the audit party he reversed the same and the learned Commissioner (Appeals) has not considered this submission at all and has not given any findings - matter remanded back on this ground. Further the show-cause notice is time-barred because the same was issued after more than one year from the date of the audit which was conducted in November 2007 and it came to the knowledge of the Department during that time regarding irregular availment of cenvat credit - Decided partly in favor of appellant.

Summary

Issues:
- Irregular availment of cenvat credit
- Demand of interest and penalty
- Time-barred show-cause notice
- Imposition of penalty under Section 11AC

Irregular Availment of Cenvat Credit:
The appellant, engaged in manufacturing Poly Styrene Products, availed cenvat credit of duty paid on inputs and capital goods. The Department alleged irregular cenvat credit availed by the appellant, leading to show-cause notices. The appellant explained discrepancies in credit availed, such as lost invoices and triplicate copies due to transit issues. The adjudicating authority demanded reversal of irregular credit, interest, and imposed penalties, which were upheld by the Commissioner (Appeals).

Demand of Interest and Penalty:
The appellant argued against paying interest and penalty, stating they voluntarily reversed inadvertently availed credit upon Department's observation, without utilizing it. The appellant contended the show-cause notice was time-barred as the audit identified irregularities in 2007, but the notice was issued in 2009. The appellant emphasized that cenvat credit was only a book entry, hence no interest was due. The AR supported the Commissioner's findings.

Time-Barred Show-Cause Notice:
The Tribunal noted that the show-cause notice was issued beyond the limitation period since the irregular cenvat credit observation was made in 2007, but the notice was sent in 2009. This delay rendered the notice time-barred, as per the relevant provisions.

Imposition of Penalty under Section 11AC:
Regarding penalty imposition under Section 11AC, the Tribunal found that the appellant had rectified the irregular credit promptly upon Department's notification, indicating no deliberate intention to contravene rules. The Tribunal disagreed with the Commissioner's penalty decision, stating that the conditions of Section 11AC were not met in this case. Consequently, the Tribunal set aside the impugned orders, remanding one appeal for further consideration and allowing another appeal with consequential relief.

In conclusion, the Tribunal found the impugned orders unsustainable in law, highlighting the time-barred show-cause notice, lack of deliberate contravention for penalty imposition, and the appellant's corrective actions upon irregular credit discovery. The Tribunal's decision favored the appellant on various grounds, emphasizing procedural and substantive legal aspects in the judgment.