2019 (11) TMI 230 - AT - Central Excise

Imposition of penalty u/r 15 (1) of CCR - wrongful availment of CENVAT Credit - it was alleged that appellant company have deliberately taken cenvat credit of the full quantity of input, being of petroleum coke which was imported in one ship load vide one Bill of Entry, but on the date of taking credit, only about 1/5 of the consignment had reached the factory and about 4/5 was still in the transit or lying at the port in the ownership of the appellant company - HELD THAT - It is a case of taking credit, part of which was rightly taken and part of which was prematurely taken. Though the same was found to be fully allowable at a later point of time after about 70 days. Admittedly there is no case of non receipt of inputs by the appellant. Further the inputs which were received in part, and the other part not received as on 30th June, 2015 was lying under the ownership of the assessee at the port or was in transit. Appeal disposed off.

Summary

Issues:
1. Imposition of penalty under Rule 15 (1) of CCR on the appellant assessee.
2. Allegation of taking cenvat credit prematurely by the appellant company.

Analysis:

Issue 1: Imposition of penalty under Rule 15 (1) of CCR on the appellant assessee:
The appellant was found to have availed cenvat credit of ?3,42,68,557/- for the quantity of 51,272.81 MT of petroleum coke, despite having received only 10,608.71 MT in their factory by 30th June, 2015. The Range Superintendent directed the appellant to provide details, leading to the realization of their mistake. The appellant calculated and paid interest amounting to ?2,29,020/- for the balance quantity received during the period from 1st July, 2015 to 10th September, 2015. The Show Cause Notice dated 01.03.2018 proposed recovering the Cenvat Credit of ?2,71,78,148/- attributable to the coke received after 30th June, 2015, along with interest and penalty under Rule 15(2) of CCR.

Issue 2: Allegation of taking cenvat credit prematurely by the appellant company:
The appellant was observed to have violated the provisions of Rule 3(1) of CCR by taking and utilizing excess credit before the receipt of goods in their factory of production. The Commissioner noted that while the appellant was entitled to the full credit eventually, they had prematurely taken the credit in full and utilized it for payment of output tax/excise duty. The Commissioner upheld the demand of interest and appropriated the same from the amount deposited before the Show Cause Notice was issued. The penalty of ?2 Lakhs under Rule 15(1) of CCR, 2004 was imposed on the appellant for deliberately ignoring the provisions of law and taking credit prematurely.

The appellant argued that the breach was minor and that they had received the full quantity of coke in their factory within two months and ten days. They relied on a Tribunal ruling in a similar case where premature credit was allowed. The Tribunal's decision was upheld by the High Court. On the other hand, the Revenue contended that there was deliberate mischief by the appellant in taking credit prematurely. They cited a Tribunal ruling where penalty was imposed for taking credit on inputs that were never received.

After considering the contentions, the Tribunal found that part of the credit was rightly taken and part was prematurely taken, but eventually found to be fully allowable. As there was no case of non-receipt of inputs by the appellant, and the part of inputs not received by 30th June, 2015 was under the ownership of the appellant, the Tribunal dismissed the appeal filed by the Revenue. The penalty imposed on the appellant was deemed nominal, and both appeals were dismissed, upholding the impugned order.

In conclusion, the Tribunal upheld the imposition of penalty under Rule 15(1) of CCR on the appellant assessee for prematurely taking cenvat credit, while also dismissing the appeal filed by the Revenue and deeming the penalty imposed on the appellant as nominal.