2009 (9) TMI 491 - AT - Central Excise

Interest and Penalty- The respondents are engaged in the manufacture of networking/IT products and availing the Cenvat credit on duty paid on inputs or capital goods used in the manufacture of final products. This case relates to the clearances made without payment of excise duty to the institutions by availing exemption under Notification No. 10/97-CE. dated 1-3-1997. This sum was payable under Rule 6(3)(b) of the Cenvat Credit Rules, 2004. The respondents had taken the Cenvat credit on all theft inputs and capital goods. Held that- no intention to evade duty by mis-statement or willful suppression of facts as assessee availing benefit of decision of Apex Court and after subsequent another decision of apex Court reversing earlier order, immediately paid duty. Neither deferment of payment or any delay as assessee availing benefit of Apex Court decision. Credit further not utilized. Impugned order setting aside interest and penalty upheld.

Summary

Issues:
Appeal against dropping of interest and penalty.

Analysis:
1. Facts of the Case: The respondents, engaged in manufacturing networking/IT products, availed Cenvat credit on duty paid on inputs. They cleared goods for home consumption and export, claiming exemption under Notification No. 10/97-CE. A demand of Rs.7,02,041/- was raised for clearances made without payment of excise duty, leading to interest and penalty imposition.

2. Revenue's Arguments: The Revenue contended that the respondents intentionally avoided paying 10% of the value of goods cleared from May 2005 to February 2006, warranting penalty. They argued that interest is leviable on delayed duty payment as per judicial precedents.

3. Respondent's Defense: The respondents maintained they paid the 10% duty on exempted goods under Rule 6(3)(b) of Cenvat Credit Rules, citing Supreme Court judgments supporting their actions. They argued against interest liability based on a precedent stating interest is not payable if credit is not utilized.

4. Judgment: The Tribunal found no intention to evade duty by the respondents, as they followed legal interpretations. The Tribunal ruled that interest was not applicable as there was no delay in payment, and the credit was not utilized. Citing the Maruti Udyog Ltd. case, the Tribunal dismissed the appeal, holding no suppression of facts or misstatement by the respondents.