2017 (3) TMI 861 - AT - Central Excise

Waiver of penalties u/r 15(2) of CCR, 2004 - N/N. 6/2006-CE dated 1.3.2006 - as the appellant has availed the cenvat credit on inputs used in the manufacture of electrical goods supplied to M/s. Suzlon Energy Ltd., the appellant is not entitled to avail the credit on the inputs used so - whether imposition of penalties justified in view of the fact that on pointing out by the department, the appellant reversed the cenvat credit alongwith interest? - Held that - The appellant did not verify whether the said project is obtained by M/s. Suzlon Energy Ltd., against international competitive bidding or not. Such mistake of the appellant was bonafide and on pointing out by the department, the appellant has reversed the credit alongwith interest - there is no specific allegation against the appellant that they have availed cenvat credit with malafide intention - the penalty is not imposable - appeal allowed - decided in favor of appellant.

Summary

Issues: Appeal against waiver of penalties under Rule 15(2) of Cenvat Credit Rules, 2004.

Analysis:
1. Facts of the Case: The appellant, engaged in manufacturing electrical goods, cleared certain goods to M/s. Suzlon Energy Ltd. without payment of duty under a specific notification. Upon scrutiny, it was found that the appellant availed cenvat credit on inputs used in the manufacture of these goods, leading to penalties being imposed under Rule 15(2) of Cenvat Credit Rules, 2004.

2. Appellant's Argument: The appellant claimed exemption under the relevant notification, asserting entitlement to credit under Rule 6(6) of the Cenvat Credit Rules for goods cleared without duty payment. The appellant argued that there was no malafide intent to avail inadmissible credit and requested a waiver of penalties.

3. Respondent's Argument: The respondent contended that the appellant, despite insufficient balance in their Cenvat Credit account, utilized credit for duty payment, indicating clear intent. It was argued that the penalty was rightly imposed considering the circumstances.

4. Judgment: After hearing both sides, the tribunal considered that the appellant's mistake in not verifying certain aspects was bonafide. The tribunal noted that the show cause notice lacked specific allegations of malafide intent. As the appellant reversed the credit with interest before adjudication, the tribunal found the penalty not imposable and set aside the order imposing penalties.

5. Conclusion: The tribunal disposed of the appeals in favor of the appellant, emphasizing the bonafide nature of the mistake and the lack of evidence of malafide intent in availing the credit. The judgment highlights the importance of verifying eligibility criteria for exemptions and credits under the relevant rules to avoid penalties.