2014 (9) TMI 801 - AT - Central Excise

CENVAT Credit - duty paying documents - appellant has taken the credit on the basis of extra copy invoices, capital goods and invoices were on the name of other unit - Held that - As appellant has got five units and credit is taken on the basis of extra copies of invoice, or on the basis of invoices in the name of other units, Department has every right to ask the appellant to justify the receipt of the inputs/capital goods in the factory and its use in the factory of the appellant. In certain cases, excess Cenvat credit is taken over and above what is admissible in the documents. Under Rule 9(5) of the Cenvat Credit Rules, 2004, the onus is on the appellant to take appropriate care and satisfy himself properly regarding admissibility of credit before taking the credit. Cenvat credit has been correctly denied by the lower authorities to the appellant, as its receipt and use in the factory of the appellant is not established. - Decided against the assessee. Levy of penalty - Rule 15(2) of Cenvat Credit Rules, 2004, read with Section 11AC of Central Excise Act, 1944 - Held that - Though, there is allegation in the show cause notice about intention to evade Central Excise duty but it has not been specifically explained in the show cause notice and the adjudication order as to how intention to evade Central Excise is established when the appellant is subjected to periodical audits by the Department and the documents on the basis of which credit is taken was available for inspection/audit. - penalty set aside - Decided partly in favour of assessee.

Summary

Issues:
Appeal against denial of Cenvat credit, imposition of penalty under Cenvat Credit Rules, 2004, and Central Excise Act, 1944.

Analysis:

Denial of Cenvat Credit:
The appellant availed Cenvat credit, but discrepancies were found during audit. The appellant argued that credit was admissible as inputs were used in their present unit, even if documents pertained to other units. The Revenue contended that irregularities in credit availed were substantial, emphasizing the need for proper documentation. The lower authorities denied credit due to lack of evidence of goods receipt and use in the factory. The appellant's explanations were deemed insufficient, and case laws cited were deemed inapplicable. The denial of Cenvat credit was upheld.

Imposition of Penalty:
The appellant argued against penalty imposition, stating no intention to evade duty and prompt payment upon detection of inadmissible credit. The penalties under Cenvat Credit Rules and Central Excise Act were set aside due to lack of evidence of intent to evade duty and timely rectification. Additionally, the penalty under Central Excise Rules was overturned as there was no proof of duty evasion. The appeal on non-imposition of penalties was allowed.

This judgment highlights the importance of proper documentation and evidence in availing Cenvat credit, as well as the significance of timely rectification in penalty imposition cases. The decision underscores the burden on appellants to establish credit admissibility and the necessity of complying with regulatory requirements to avoid penalties.