2013 (7) TMI 604 - AT - Central Excise

Cenvat Credit Reversal - Receipt from insurance company was against damage of capacitor Held that - The recovery made from insurance company being related to capital goods attributable to credit of Rs. 1,10,956/-gained by the appellant earlier, to be reversible. Therefore, the duty element of Rs. 1,10,956/- confirmed. Interest shall follow Decided against the Assessee. Penalty of Rs. 1,10,956/-in terms of Rule 15(2) of Cenvat Credit Rules, 2004 read with Section 11AC of Central Excise Act, 1944 Held that - No mensrea brought out by show cause notice to invoke Section 11AC in the present case. Intention of evasion being absent there shall not be penalty under Rule 15(2) of Cenvat Credit Rules, 2004 Decided in favor of Assessee.

Summary

Issues:

1. Adjournment sought by the Appellant for filing additional grounds.
2. Demand of duty and penalty on receipt from insurance company for damage of capacitor.
3. Applicability of Cenvat Credit Rules, 2004 on recovery from insurance company.
4. Recovery of capital goods credit and duty element.
5. Imposition of penalty under Rule 15(2) of Cenvat Credit Rules, 2004.

Issue 1:
The Appellant sought an adjournment for filing additional grounds, which was rejected by the Tribunal as no application was made earlier to appreciate any valid cause for the delay. The Tribunal held that the plea for adjournment was not entertainable in this case.

Issue 2:
The Appellant contended that there was no basis for the demand of duty and penalty amounting to Rs. 1,10,956/- each, as the receipt from the insurance company was related to the damage of a capacitor not liable to duty. However, the Revenue supported the adjudication of the duty and penalty.

Issue 3:
Upon hearing both sides and examining the record, it was established that the Appellant received amounts from the insurance company for the damaged capacitor, which was considered as capital goods under the Cenvat Credit Rules, 2004. The Tribunal confirmed the duty element of Rs. 1,10,956/- as the recovery from the insurance company was related to the capital goods credit previously availed by the Appellant.

Issue 4:
Regarding the penalty, the Revenue intended to recover a penalty of Rs. 1,10,956/- under Rule 15(2) of the Cenvat Credit Rules, 2004, along with Section 11AC of the Central Excise Act, 1944. However, the Tribunal noted that there was no mens rea established by the show cause notice to invoke Section 11AC, indicating the absence of intention to evade duty. Consequently, the Tribunal ruled that there shall be no penalty under Rule 15(2) of the Cenvat Credit Rules, 2004.

Final Decision:
The Tribunal allowed the appeal partly, confirming the duty element of Rs. 1,10,956/- while setting aside the penalty imposed under Rule 15(2) of the Cenvat Credit Rules, 2004, due to the absence of intention to evade duty in the present case. Interest was also directed to follow on the confirmed duty amount.