2018 (8) TMI 79 - AT - Central Excise

Penalty u/r 15(2) of CCR read with Section 11AC of the CEA - Reversal of credit availed on cesses alongwith Interest - Held that - It is an admitted fact on record that the EDI system was not updated at the time of filing the bill of entry by the appellant. Appellant had also paid such amount into the Central Government account. Thus, under such circumstances, it cannot be said that taking of CENVAT credit of the duty amount paid into the Government exchequer would call for invocation of penal provisions contained in the CENVAT structure - also there is no mala fide intention - penalty not warranted - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Disputed CENVAT credit on imported steel scraps.
2. Imposition of penalty under Rule 15(2) of Cenvat Credit Rules, 2004.

Analysis:
1. The appellant, engaged in manufacturing, imported steel scraps during a disputed period and availed CENVAT credit captured in the Bill of Entry. The department disputed the credit post-01.04.2012 due to the absence of cess levy. The appellant reversed the credit and paid interest. The adjudication confirmed the demand and imposed a penalty. The appeal challenged the penalty.

2. The appellant did not contest the CENVAT credit and interest demand but argued against the penalty. The appellant claimed the credit was not availed fraudulently. The Revenue contended that the penalty was justified as the appellant reversed the credit only after an audit pointed out the error.

3. The Tribunal noted that the appellant paid the amount to the Government and there was no evidence of malafide intent in availing the credit. The penalty under Rule 15(2) was deemed unjustified without proof of fraudulent intent. The impugned order's penalty imposition was set aside, and the appeal was partly allowed in favor of the appellant.