2017 (12) TMI 944 - AT - Central Excise

Demand of interest - CENVAT credit - denial on the ground of non-production of input invoices - Held that - the appellants have reversed the credit of 1, 60, 975/- in June 2014 itself and he has also paid interest of 90, 341/- payable under Rule 14 of CENVAT Credit Rules 2004 - appellant have got sufficient CENVAT credit in their CENVAT credit account and they have not utilized the same thus interest not payable - reliance placed in the case of COMMISSIONER OF CENTRAL EXCISE & SERVICE TAX LARGE TAXPAYER UNIT BANGALORE Versus M/s BILL FORGE PVT LTD BANGALORE 2011 (4) TMI 969 - KARNATAKA HIGH COURT - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Appeal against rejection of CENVAT credit by Commissioner (A)
- Allegation of suppression of facts with intent to evade duty
- Demand of interest and penalty under Central Excise Act and CENVAT Credit Rules

Analysis:
1. Appeal against rejection of CENVAT credit by Commissioner (A): The appellant, engaged in manufacturing parts of AC, availed CENVAT credit of inputs without supporting invoices. Despite efforts to produce the invoices, they were unable to do so and voluntarily reversed a portion of the credit. The Assistant Commissioner confirmed the demand and imposed interest and penalty. The Commissioner (A) rejected the appeal, leading to the present appeal before the Tribunal.

2. Allegation of suppression of facts with intent to evade duty: The appellant argued that the impugned order was contrary to binding judicial precedent and that non-production of invoices was a procedural lapse, not an attempt to evade duty. The appellant contended that interest was not payable as they had not utilized the wrongly taken credit. The AR, however, supported the findings of the impugned order.

3. Demand of interest and penalty under Central Excise Act and CENVAT Credit Rules: After hearing both parties and examining the records, the Tribunal noted that the appellant had voluntarily reversed a significant portion of the credit and paid the interest. Citing relevant judicial decisions, the Tribunal held that since the appellant had sufficient credit in their account and had not utilized it, they were not liable to pay interest and penalty. Consequently, the Tribunal allowed the appeal and dropped the demand for interest and penalty.

In conclusion, the Tribunal set aside the demand for interest and penalty, ruling in favor of the appellant based on the interpretation of relevant legal provisions and judicial precedents.