2017 (4) TMI 275 - AT - Central Excise

Imposition of penalty - Rule 15(2) of CCR, 2004 read with Section 11AC of CEA, 1944 - it is the case of petitioner that premature availment of Cenvat credit was an inadvertent mistake and was not on account of any mala fide intention, thus penalty to be set aside - Held that - The fact that such credit entry were only made in the Cenvat credit accounts, but the credit so availed was not utilized before the actual validation period, I am of the view that such premature availment cannot be on account of any mala fide. If that be so, the appellants would not attract any penalty - appeal allowed - decided in favor of appellant.

Summary

Issues: Imposition of penalty under Rule 15(2) of Cenvat Credit Rules, 2004 read with Section 11AC of Central Excise Act, 1944 for premature availment of Cenvat credit without making payment for input services.

In this judgment, the Appellate Tribunal CESTAT NEW DELHI addressed the challenge to the penalty of &8377; 73,559 imposed on the appellant for availing Cenvat credit without first making payment for input services. The appellant admitted to the premature availment but claimed it was an inadvertent mistake without any mala fide intention, highlighting that the credit was not utilized and the closing balance was always higher than the credit availed. The appellant argued that since interest was paid for the premature availment, imposing a penalty would be unjust. The Tribunal noted that while the appellant contravened Rule 4(7) of the Cenvat Credit Rules, 2004 by not making payment before availing credit, there was no dispute regarding their entitlement to the credit. The Tribunal recognized the time gap as the only issue, with the credit being entered in the accounts before actual payment. As the credit was not utilized prematurely and there was no mala fide intent, the Tribunal held that the penalty was unwarranted. Consequently, the Tribunal set aside the penalty imposed, allowing the appeal in favor of the appellant. The judgment was pronounced on 21-10-2016 by Ms. Archana Wadhwa, Member (J) of the Tribunal.