2016 (7) TMI 1139 - AT - Central Excise

Levy of penalty - CENVAT Credit - allegation that input was not at all received in the factory of the appellant - Held that - The appellant had issued Central Excise invoices to the customer and had also reversed the credit. This reveal that they had no intention to evade payment of duty, but the same was due to non - adherance of proper procedures. The Commissioner (Appeals) has observed that no case has been made out to prove complicity of Vice President in the offence with intent . That appellants discharged the duty liability on the entire imported goods. - As there is no evidence to establish suppression of facts or willful misstatement with intent to evade payment of duty, I am of the opinion that the penalty under section 11 AC cannot be imposed. - Decided in favor of assessee.

Summary

Issues: Irregular availment of CENVAT Credit on imported goods not received in the factory, imposition of penalties on the appellant and company officials, reversal of credit before utilization, intention to evade payment of duty, procedural mistakes, negligence, suppression of facts, and applicability of penalties under CENVAT Credit Rules and Central Excise Act.

The judgment by the Appellate Tribunal CESTAT Hyderabad involved a case where the appellant, engaged in cement manufacturing, imported pet coke but cleared a portion directly to a customer from the port without receiving it in their factory. The appellant availed CENVAT Credit on the entire quantity, leading to a show cause notice alleging irregular credit availment. The original authority confirmed the demand for irregularly availed credit, imposed penalties, and the appellant appealed. The Commissioner (Appeals) set aside the penalty on the Vice President but upheld the rest of the order. The appellant contended that the mistake was procedural, with no intention to evade duty, and reversed the credit promptly. The department argued that the credit was availed without receiving the goods, contravening CENVAT Credit Rules. The Tribunal found that while credit was availed without goods receipt, there was no intent to evade duty or commit fraud, attributing the issue to procedural errors. The penalties under Rule 15(2) of CCR with Section 11 AC were deemed unjustified due to the lack of evidence of willful misstatement or intent to evade duty. Consequently, the penalties imposed on the appellant and a company official were set aside, affirming the demand for CENVAT Credit with interest. The judgment partly allowed the appeals by modifying the order to set aside the penalties while upholding the demand/recovery of CENVAT Credit.