2020 (4) TMI 240 - AT - Central Excise

Imposition of penalty u/r 15(2) of CCR, 2004 - CENVAT Credit - capital goods - pig iron moulds - assessee has taken 100% Cenvat credit on pig iron moulds falling under Chapter 84 of Central Excise Tariff Act, 1985 by declaring them as inputs - Rule 4(2)(a) of CCR, 2004 - HELD THAT - In this case, from the impugned order it appears that the learned Commissioner has, after going through the show cause notice, the reply in defence and other records of the case, has held that the assessee was indeed entitled to the Cenvat credit which they have availed but they have only availed it in advance. It is also clear that they have availed the credit under the head of inputs whereas they could have availed it only under the head of capital goods . In fact, she allowed the entire Cenvat credit for this reason and has only demanded interest for the Cenvat credit availed well in advance. No evidence of fraud, collusion, wilful misstatement, suppression of facts which are essential conditions for imposition of penalty under Rule 15(2) of CCR, 2004 are evident either from the SCN or from the impugned order - the penalty imposed upon assessee under Rule 15(2) of CCR, 2004 is set aside. Revenue s appeal is allowed by remanding the matter to the original authority for requantification of the interest involved after giving both sides adequate opportunity of being heard and presenting their case. Appeal allowed in part and part matter on remand.

Summary

Issues:
1. Dispute over Cenvat credit on pig iron moulds.
2. Calculation of interest on wrongly availed Cenvat credit.
3. Imposition of penalty under Rule 15(2) of CCR, 2004.

Analysis:
1. The case involved a dispute regarding the Cenvat credit availed by the assessee on pig iron moulds, which were considered to be capital goods instead of inputs. The assessee had taken 100% Cenvat credit on the moulds, which was found to be in contravention of Rule 4(2)(a) of CCR, 2004. The Commissioner confirmed the interest payment on the wrongly availed Cenvat credit and imposed a penalty under Rule 15(2) of CCR, 2004. However, it was noted that the assessee had only availed the credit in advance and not through fraud or suppression of facts, leading to the imposition of the penalty being challenged.

2. The Revenue appealed the calculation of interest on the wrongly availed Cenvat credit, arguing that the amount eligible to the assessee in April 2006 would have been available only in April 2007. The Tribunal found merit in this argument and remanded the matter to the adjudicating authority for the correct computation of interest. This decision highlighted the importance of accurate calculation of interest on such matters to ensure fairness and compliance with the law.

3. The assessee's appeal focused on setting aside the penalty imposed under Rule 15(2) of CCR, 2004. The Tribunal observed that the penalty clause under Rule 15(2) is applicable in cases involving fraud, collusion, wilful misstatement, or contravention of Excise Act provisions with intent to evade duty payment. In this case, the Commissioner had allowed the Cenvat credit but demanded interest for early availed credit, without evidence of fraudulent intent. Consequently, the penalty was set aside, emphasizing the necessity of meeting specific conditions for penalty imposition under the law.

In conclusion, the Tribunal allowed the assessee's appeal by setting aside the penalty and granted the Revenue's appeal by remanding the matter for the correct calculation of interest. This detailed analysis of the judgment showcases the legal intricacies involved in determining Cenvat credit eligibility, interest computation, and penalty imposition under the relevant provisions of the law.