2017 (9) TMI 779 - AT - Central Excise

Penalty - Reversal of CENVAT credit - appellant after extraction of normal paraffin from the imported kerosene returned the kerosene after such process, to M/s. CPCL - concessional rate of duty under N/N. 26/99-Cus. dated 28.2.1999 - Held that - There could be no ground of bona fide belief on such action when they have availed knowingly the CENVAT credit on the CVD paid on kerosene. The CENVAT Credit Rules did not permit for any ambiguity in interpreting the provisions when the inputs are cleared as such - In the present case, there is no possibility or confusion or bonafide belief for non-reversal of credit in time. In fact, the detailed investigation of accounts as well as statement of various responsible persons of the appellant only could bring in the quantum of reversal, which should have been done by the appellant. It is well within the knowledge by the appellant and there could be no bonafide in not following the procedure and for submitting incorrect Chartered Accountant s certificate - penalty upheld - appeal dismissed - decided against appellant.

Summary

Issues:
1. Liability to reverse CENVAT credit on kerosene cleared to another entity.
2. Imposition of penalty equal to the duty to be reversed.

Analysis:
1. Liability to reverse CENVAT credit on kerosene cleared to another entity:
The case revolved around the appellant's failure to correctly reverse the CENVAT credit on kerosene cleared to another entity, M/s. CPCL, after processing. The appellant initially took CENVAT credit on the central excise duty paid on the kerosene procured. However, upon clearing the processed kerosene to M/s. CPCL without further manufacturing, the appellant failed to reverse the credit as required by the CENVAT Credit Rules. The dispute arose when the Revenue officers discovered this oversight during an inspection. The original authority quantified the reversal amount, and both parties appealed to the Commissioner (Appeals). The Commissioner agreed with the Revenue that the penalty imposed was justified, as the appellant did not pay the quantified amount along with interest and the reduced penalty within the specified period.

2. Imposition of penalty equal to the duty to be reversed:
The appellant contested the imposition of an equal penalty to the duty to be reversed. The appellant's argument centered on the lack of suppression, fraud, or collusion in their actions. They claimed that the department was aware of their accounting procedures and the storage of imported and indigenous kerosene in the same facility. The appellant's counsel requested a waiver of the penalty, emphasizing that they had reversed the credit voluntarily before any show cause notice was issued. However, the Revenue argued that the appellant knowingly failed to reverse the credit on cleared kerosene, citing the clear provisions of the CENVAT Credit Rules. The Revenue contended that the appellant's actions, including submitting incorrect information, did not warrant leniency. The Tribunal, after considering both sides, upheld the penalty imposed, stating that the appellant's failure to follow proper procedures and submit accurate information left no grounds for interference. The appeal was ultimately dismissed, affirming the penalty imposed by the appellate authority.

In conclusion, the judgment addressed the appellant's liability to reverse CENVAT credit on cleared kerosene and the imposition of a penalty equal to the duty to be reversed. The Tribunal found that the appellant's actions did not demonstrate any bona fide belief or confusion regarding the reversal of credit, emphasizing the importance of compliance with the CENVAT Credit Rules. The decision upheld the penalty, highlighting the appellant's responsibility to adhere to proper accounting procedures and accurately report transactions.