2009 (7) TMI 1009 - AT - Central Excise

Summary

Issues: Imposition of penalty for wrongly availing duty credit on capital goods.

In this judgment by Ms. Archana Wadhwa, the appellants, engaged in manufacturing plastic household articles, availed duty credit on capital goods but later found that the machines on which the credit was claimed were not installed in their factory. The dispute centered on the imposition of a penalty of Rs. 96,124 for this error.

The Commissioner (Appeals) noted that the appellants had voluntarily reversed the credit for one machine before any official visit, indicating no intent to evade duty. However, for the other machine, the penalty was upheld as the excess credit was reversed only after being pointed out during an inspection. The appellants argued that the machine in question was installed in their separate unit eligible for the credit, and the error was a clerical mistake. They contended that they did not benefit from the excess credit due to substantial unutilized credit, making the situation revenue neutral.

Upon review, it was found that the machine was indeed eligible for the credit in the appellants' second unit, and the error lay in availing it under the wrong entity. As the excess credit remained unused and was merely a record entry, the tribunal concluded that no penalty was justified. Consequently, the penalty of Rs. 96,124 was set aside, and the appeals were allowed in favor of the appellants with consequential relief.

In conclusion, the judgment addressed the issue of penalty imposition for mistakenly availing duty credit on capital goods, highlighting the importance of intent, eligibility, and actual benefit derived from the error in determining the appropriate course of action.