2018 (8) TMI 1271 - AT - Central Excise

Demand of Interest and penalty - credit wrongly availed and later reversed - Held that - Instead of submitting the data of utilisation on 11-9-2017 the appellants submitted a letter of balance of credit as on 6th of each month. That does not establish that the appellants had not utilised the Cenvat credit. In these circumstances, the claim of the appellants that they have reversed the credit without utilising the credit is rejected as unsubstantiated - demand of Interest sustained. Imposition of penalty - Rule 15(1) of Cenvat Credit Rules - Held that - The said Rule prescribes that penalty can be imposed if the appellants took any credit wrongly or in any contravention of any of the rules - In the instant case, it is an admitted position of the appellants that they had wrongly availed the credit. The rule does not require establishing any intention to evade duty - the imposition of penalty is upheld. Appeal dismissed - decided against appellant.

Summary

Issues:
1. Liability for interest on wrongly availed credit.
2. Imposition of penalty under Rule 15(1) of Cenvat Credit Rules, 2004.

Analysis:

1. Liability for interest on wrongly availed credit:
The appeal was filed against the demand for interest on credit wrongly availed and later reversed by the appellant, Syngenta India Ltd. The appellant argued that since they had reversed the credit without utilizing it, no interest should be demanded. However, the appellant failed to provide data of credit utilization as requested, submitting only a balance of credit each month. Consequently, the claim that credit was reversed without utilization was deemed unsubstantiated, leading to the sustained liability to pay interest.

2. Imposition of penalty under Rule 15(1) of Cenvat Credit Rules, 2004:
The appellant contended that there was no intention to avail wrong credit, thus no penalty should be imposed. They argued that the penalty cannot be imposed without proving the intention to evade duty, citing Rule 15(1) of Cenvat Credit Rules. However, it was established that the appellant had wrongly availed the credit, which sufficed for penalty imposition as per the rule. The rule does not mandate proving intention to evade duty for penalty imposition. Consequently, the imposition of penalty was upheld, and the appeal was dismissed.

In conclusion, the judgment upheld the liability for interest on wrongly availed credit due to lack of substantiating evidence and justified the imposition of penalty under Rule 15(1) based on the admitted wrongful availment of credit, without requiring proof of intent to evade duty.