2009 (8) TMI 481 - AT - Central Excise

Interest and penalty- Cenvat- Notification No. 6/2002-C.E., dated 1-3-2002- the appellants were engaged in printing on steel sheets known as printed sheets, classifiable under sub-heading 7210.30 of the Schedule to the Central Excise Tariff Act, 1985. By notification No. 6/2002-C.E., dated 1-3-2002, as amended by Notification No. 16/2004-C.E., dated 28-2-2004 duty was reduced from 16% Ad valorem to 8% Ad valorem. The appellants took suo motu credit. A show cause notice dated 13-2-2006 was issued proposing to demand the Cenvat credit of Rs.9,31,360/- alongwith interest and penalty. Original authority confirmed the demand of entire amount of duty alongwith interest and also imposed penalty of Rs.1 lakh. Commissioner (Appeals) upheld the adjudication order. Held that- demand of duty is upheld which has already been reversed by the appellants in their Cenvat account as submitted by the learned Advocate. After considering the facts and circumstances of the case penalty is reduced to Rs.10,000/-. Regarding demand of interest, it is directed to the Original authority to verify as to whether credit was utilized and, if the appellants have not utilized the credit during the material period, no interest will be demanded.

Summary

The Appellate Tribunal CESTAT, New Delhi, under the jurisdiction of Shri P.K. Das, Member (J), heard a case where the appellants were involved in printing on steel sheets known as printed sheets. They mistakenly paid duty at a higher rate than required, resulting in an excess payment of Rs.9,31,360. The excess duty was credited by their sister unit, but later reversed. The appellants then took suo motu credit in their Cenvat account. A show cause notice was issued demanding the Cenvat credit along with interest and penalty, which was confirmed by the original authority and upheld by the Commissioner (Appeals).

The advocate for the appellants argued that they had approached the jurisdictional Asst. Commissioner to allow the credit, and that they had filed a refund claim as directed by Central Excise officers. The advocate cited legal precedents to support the argument that the credit was not utilized and therefore not subject to interest. The revenue representative contended that the appellants had taken suo motu credit which was not permitted and had also filed a refund claim, leading to misleading actions. The Tribunal found that the appellants had reversed the credit and filed a refund claim, making the demand of duty sustainable. The penalty was reduced to Rs.10,000, and the question of interest was referred back to the original authority for verification of credit utilization during the relevant period.

In conclusion, the demand of duty was upheld, the penalty was reduced, and the question of interest was deferred pending verification of credit utilization. The case highlighted the importance of correctly following procedures for credit claims and refunds under the Central Excise Act, 1944.