2009 (5) TMI 255 - AT - Central Excise

Imposition of penalty for wrong availment of credit wrongly availed credit reversed on being pointed out by assessee s internal audit - It is quite clear that the omission on the part of both the Units was found out by their own internal audit and corrective action was taken by the appellants themselves. Therefore, the decision of the Commissioner (Appeals) to impose nominal penalty cannot be found fault with. Since all the units belong to the same company, just because each unit is registered separately, it cannot be said that separate penalty must have been imposed. I do not find anything wrong with the discretion used by the Commissioner - As regards demand for interest, the Tribunal has been consistently holding that interest is not payable in respect of wrong credit availed if the balance available in the Cenvat credit account is more than amount of irregular credit throughout the period. Thus, appeal filed by the Revenue has no merits and accordingly rejected.

Summary

The appellate tribunal CESTAT, AHMEDABAD, in the 2009 (5) TMI 255 case, heard an appeal involving M/s. Bodal Chemicals Limited-Unit I (now Unit-II) and M/s. Bodal Chemicals Limited Unit-II (now Unit-III), both engaged in dye manufacturing and availing Cenvat credit. Unit-II availed credit without receiving inputs, which were actually received by Unit-III, and vice versa. The Commissioner (Appeals) upheld a penalty on Unit-II but dropped the penalty on Unit-III, stating that interest need not be paid if the appellants had sufficient Cenvat credit balance. The Revenue appealed, arguing for interest payment and penalties for both units. The tribunal found that the internal audit identified the errors, and corrective actions were taken by the appellants, justifying the nominal penalties imposed. The tribunal also noted that interest is not payable if the Cenvat credit account balance exceeds the irregular credit amount. The appeal by the Revenue was rejected, upholding the Commissioner's decision. The judgement was pronounced in court.