2018 (6) TMI 1067 - AT - Central Excise

Demand of Interest and penalty - irregular availment of CENVAT credit, but was not utilised - case of the department is that the wrong availed credit was not utilised till the date of reversal - Held that - Even though Cenvat credit was not utilized but fact remains that credit was availed fraudulently without receipt of the material as admitted by the Director of the company - it is seen that appellant have knowingly availed the credit only on the invoice without receipt of the goods therefore no case was made out for waiver of penalty - penalty upheld. Demand of Interest - Held that - In the facts of the present case though the appellant had taken wrong credit but same was not utilised therefore as per the amended Rule 14 interest is not chargeable - demand of interest set aside. Personal penalty on Shri. Ravindra Chimanlal Agarwal - Held that - Shri. Ravindra Chimanlal Agarwal admitted that they have wrongly availed the credit only on the invoice for which they have paid the some charges to the invoice issuing person. In this fact Shri. Ravindra Chimanlal Agarwal does not deserve leniency hence penalty imposed upon him is sustained - penalty upheld. Appeal allowed in part.

Summary

Issues:
1. Availing wrong credit on invoices without supply of input
2. Appeal for waiver of penalty and interest
3. Personal penalty imposed on the director

Analysis:
1. The appellant was found to have availed wrong credit on invoices issued without the supply of input. The appellant admitted to reversing the wrong availed credit, not contesting the Cenvat credit availed but seeking waiver of penalty and interest. The director of the company filed an appeal for the waiver of penalty imposed on him.

2. The appellant's counsel argued for the waiver of penalty and interest, emphasizing that the wrong availed credit was not utilized until its reversal. On the contrary, the Revenue representative reiterated the findings of the impugned order. After considering both sides' submissions and reviewing the records, it was noted that even though the credit was not utilized, it was fraudulently availed without receiving the material, as admitted by the company's director.

3. The director's statement revealed that the appellant knowingly availed credit only on the invoices without actually receiving the goods, leading to no grounds for waiving the penalty. Regarding the demand for interest, Rule 14 stipulated that interest would be charged only when wrong credit was both taken and utilized. Since the appellant had taken but not utilized the wrong credit, interest was deemed not chargeable. The judgment upheld the penalty on the company and the director, as the director admitted to wrongfully availing credit on invoices for which charges were paid, indicating no leniency deserved.

In conclusion, the interest demanded under Rule 14 was set aside, while the penalties imposed on the company and the director were upheld. The appeal by the company was partly allowed, while the appeal by the director was dismissed.