2018 (12) TMI 921 - AT - Central Excise

100% EOU - Irregular CENVAT Credit - it was alleged that appellant had availed excess credit of ₹ 3,123/0 compared to Annexure-10 Registry, utilized an amount of ₹ 11,088/- without availability of credit - Held that - The appellant is a 100% EOU and as and when the audit pointed out the irregular availment of credit, the appellant reversed the same along with interest and also paid 25% of the penalty as directed by the original authority. The department has not brought any evidence on record to show that the appellant have suppressed the material fact with intent to evade payment of duty. As and when it was brought to their notice, they reversed the same. The impugned order imposing the penalties is not sustainable and the same is set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Appeal against rejection of appellant's appeal challenging imposition of penalty for irregular CENVAT credit availed.

Analysis:
1. The appellant, engaged in manufacturing excisable goods, availed excess credit, utilized credit without availability, and took a wrong opening balance of service tax credit. A show-cause notice was issued for recovery of wrongly availed CENVAT credit along with interest and penalty. The adjudicating authority confirmed the demand and imposed a penalty under Rule 15(2) of Central Excise Rules, 2002. The appellant challenged the penalty imposition before the Commissioner.

2. The appellant argued that the penalty imposition was unsustainable as they had reversed the irregular credit along with interest before the show-cause notice. They contended that the omission was unintentional, and there was no intention to evade duty. The appellant's counsel cited various decisions supporting their position, emphasizing the voluntary reversal of credit and the lack of evidence showing intent to evade duty.

3. The respondent defended the penalty imposition, acknowledging the reversal of credit by the appellant before the show-cause notice. The respondent highlighted that the appellant had paid 25% of the penalty voluntarily as directed by the original authority.

4. After considering the arguments and case records, the tribunal noted that the appellant, a 100% Export Oriented Unit, had promptly rectified the irregular credit upon audit observation. The tribunal found no evidence of intentional evasion of duty and observed that the appellant had complied with the reversal and partial penalty payment. Relying on precedent judgments, the tribunal concluded that the penalty imposition was unwarranted in the circumstances. Consequently, the tribunal set aside the impugned order, allowing the appeal of the appellant.