2018 (1) TMI 701 - AT - Central Excise

Penalty u/s 11 AC of the Central Excise Act, 1944 - CENVAT credit - Banking & Financial Services - Held that - the issue involved was a bona-fide issue and the appellant could have been under a bona-fide belief that such credit was available to them even prior to the date on which they had availed the same. There is no evidence produced by the Revenue that said availment was with any mala-fide intention - penalty u/s 11AC not justifiable - appeal dismissed - decided against Revenue.

Summary

Issues involved:
1. Setting aside penalties under Section 11 AC of the Central Excise Act, 1944
2. Imposition of penalty under Rule 15(1) of the Cenvat Credit Rules, 2004
3. Bona-fide belief in availment of Cenvat credit
4. Mala-fide intention and evidence requirement for penalty imposition

Analysis:

1. The appeal was filed by the Revenue against the order setting aside penalties under Section 11 AC of the Central Excise Act, 1944. The Commissioner (Appeals) had upheld a penalty of &8377; 50,000 under Rule 15(1) of the Cenvat Credit Rules, 2004. The issue arose from the objection to the availment of Cenvat credit of duty on Service Tax paid on Banking & Financial Services, which the assessee accepted and debited the credit.

2. The original adjudication proceedings confirmed the debit entry, interest, and penalty. The Commissioner (Appeals) upheld the interest and penalty under Rule 15(1) but set aside the penalty under Section 11 AC. The Tribunal noted that the appellant might have genuinely believed the credit was available to them before availing it. There was no evidence of mala-fide intention, and the appellant promptly reversed the credit upon realizing the error.

3. The Tribunal found no justification for imposing a penalty under Section 11 AC due to the lack of evidence of mala-fide intent. It was observed that if the penalty under Section 11 AC was set aside, the penalty under Rule 15(1) should also have been revoked. The Tribunal rejected the Revenue's appeal and allowed the Cross Objection filed by the assessee, treating it as a Cross Appeal.

4. In conclusion, the Tribunal rejected the Revenue's appeal while allowing the Cross Objection/Appeal filed by the assessee. The judgment emphasized the absence of evidence supporting mala-fide intent in availing the credit and the subsequent reversal of the same by the appellant upon notification of the error.