2009 (7) TMI 1023 - AT - Central Excise

Summary

Issues involved: The issue involves the availing of Cenvat Credit on Capital goods exceeding the permissible limit for a financial year, leading to the reversal of credit, issuance of a show cause notice for interest and penalty, and the subsequent appeal challenging the imposition of penalty under Rule 15 of Cenvat Credit Rules.

Summary:

1. Availing of Cenvat Credit: The appellants had taken Cenvat Credit on Capital goods exceeding the limit allowed for a financial year, resulting in the reversal of the excess credit upon objection by the Revenue.

2. Interest Liability: The Assistant Commissioner, relying on precedent decisions, held that since the wrongly availed credit was not utilized by the assessee, the liability of interest did not arise. The appellate authority concurred with this finding and rejected the Revenue's appeal on the claim of interest.

3. Penalty Imposition: The Assistant Commissioner found no mala fide intention of the assessee in availing the credit, thus not justifying the imposition of penalty. However, the appellate authority imposed a penalty under Rule 15(1) of Cenvat Credit Rules, citing a procedural violation and the absence of mens rea requirement.

4. Appeal and Penalty Justification: The appellants contended that the show cause notice did not specify the sub-rule of Rule 15 and argued against the imposition of penalty due to the absence of mala fide intention and the payment of duty before the notice. The Commissioner (Appeals) upheld the penalty imposition under Rule 15(1) without requiring mala fide intention, considering the procedural violation and imposed a penalty of Rs. 5,000, deemed reasonable.

5. Tribunal Decision: The Tribunal rejected the appeal filed by the appellant, upholding the penalty imposed by the Commissioner (Appeals) under Rule 15(1) for the procedural violation despite the absence of mala fide intention.

In conclusion, the Tribunal upheld the penalty imposed under Rule 15(1) for the procedural violation of availing excess Cenvat Credit on Capital goods, despite the absence of mala fide intention, and rejected the appellant's appeal.