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2018 (11) TMI 1079 - AT - Central ExciseCENVAT Credit - certain goods purchased which were not used in the manufacture of their final products - Held that - From perusal of the Show Cause Notice, it is found that there is no allegation of suppression or fraud or misstatement. In fact, the only strongest allegation against the appellant is that the fact of availing ineligible credit came to the knowledge of the Department only after the verification conducted by the internal audit wing of the Department on 03.01.2013 and 04.01.2013, which had been duly reciprocated in good faith by the appellant by accepting and filing its December 2012 ER-1 return which remains undisputed. Extended period of limitation - Held that - The appellant had reversed the unutilized CENVAT Credit since it is nowhere disputed, either in the Show Cause Notice or in the Order-in-Original or in the impugned Order as to the availability of excess CENVAT Credit - invocation of extended period not justified. Both Interest u/s 11AA and Penalty u/s 11AC are deleted. Appeal allowed - decided in favor of appellant.
Issues:
Challenge to interest and penalty for the period 01.03.2011 to 31.12.2012. Analysis: 1. The Revenue issued a Show Cause Notice alleging that the appellant had availed CENVAT Credit on goods not used in manufacturing final products, which was not legally correct. The appellant debited the amount in December 2012 ER-1 return and paid Education Cess and SHE Cess. The appellant included readymade shirts in stock before the duty imposition. The Department alleged violation of Rule 3 of CENVAT Credit Rules, 2004. 2. The Order-in-Original demanded duty, interest under Section 11AA of the Central Excise Act, and penalty under Section 11AC. The appellant appealed against this order after an unsuccessful first appeal. 3. The Ld. Advocate for the appellant argued that the appellant filed monthly ER-1 returns, voluntarily reversed the alleged irregular CENVAT Credit in December 2012, and that the Show Cause Notice was time-barred. The Advocate relied on various judgments to support the contention that no interest or penalty should be levied. 4. The Ld. Department Representative contended that interest and penalty were mandatory and should be sustained as there was no finding that the excess CENVAT Credit was not utilized by the appellant. 5. The Member (Judicial) analyzed the contentions and found no allegation of suppression or fraud in the Show Cause Notice. The appellant had voluntarily reversed the unutilized CENVAT Credit. The Member relied on judgments to support the argument that the extended period of limitation was not valid and that interest and penalty were not justified. 6. The appellant had submitted that the ineligible CENVAT Credit was never utilized, and the excess balance was lying in its CENVAT Credit Account. This statement was not controverted by the authorities. The Member set aside the demand for interest and penalty, allowing the appeal. 7. Consequently, both the interest under Section 11AA and penalty under Section 11AC were deleted in the judgment pronounced on 28.08.2018.
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