2016 (6) TMI 401 - AT - Central Excise

Non-payment of cenvat credit on supplementary invoices - penalty imposed - period of limitation - Held that - The admitted facts are that the appellants cleared inputs as such, on which they have availed cenvat credit. The credit on inputs was availed on two different dates. Initially, on the main invoice and later on the additional amount based on supplementary invoice. When such inputs were cleared, they paid an amount equal to the credit taken for the first time without considering the credit taken on supplementary invoices. The plea on the part of the appellant is that there has been an omission mainly due to the credit taken on two occasions and not with an intent to avoid the payment of duty. The admitted facts are that the amount along with interest so payable has been paid as pointed out by the Audit. As find that based on the facts as narrated above, no proceedings by way of issuance of notice is required in the present case in terms of sub-section (2 B) of Section 11A of the Central Excise Act, 1944. In the present case, the show cause notice issued after almost three years of Audit invoked extended period for demanding the amount, which is paid with interest by the appellant much before the issue of notice. As such, find that the impugned order is not sustainable inasfar as the penalty is concerned. The appeal is allowed to that extent.

Summary

Issues involved:
- Demand and recovery of cenvat credit along with interest
- Imposition of penalty under Section 11 AC read with Rule 15(2) of the Cenvat Credit Rules, 2004
- Appeal against the order confirming the demand and penalty

Analysis:

Issue 1: Demand and recovery of cenvat credit along with interest
The appellants, engaged in the manufacture of strips and wires of aluminium and copper, availed cenvat credit on duty paid inputs during the period April 2007 to March 2008. They initially took credit based on invoices and later additional credit based on supplementary invoices. The inputs cleared as such were paid duty equivalent to the initial credit taken. However, the credit based on supplementary invoices was not reversed initially, leading to a demand for recovery along with interest. The appellant reversed the amount with interest after an audit pointed out the error.

Issue 2: Imposition of penalty under Section 11 AC read with Rule 15(2) of the Cenvat Credit Rules, 2004
A show cause notice was issued to demand the amount along with interest, and the Original Authority confirmed the demand, imposed a penalty equal to the duty, and the Commissioner (Appeals) upheld the decision. The appellant challenged the penalty imposition, arguing that the reversal of credit with interest was made promptly after the audit highlighted the oversight. They contended that there was no malafide intent, and the error occurred due to a clerical mistake while reversing the credit. The appellant sought closure under sub-section (2B) of Section 11 A of the Central Excise Act, 1944, asserting that the delayed show cause notice was unjustified.

Issue 3: Appeal against the order confirming the demand and penalty
The appellant appealed against the order confirming the demand and penalty, primarily contesting the penalty imposition. The appellant's counsel argued that no element of fraud or collusion could be alleged, and relied on legal precedents to support their case for non-imposition of penalty. The Revenue strongly opposed the appellant's plea, asserting that the penal provisions were applicable due to the appellant's failure to follow legal provisions regarding payment equivalent to the credit taken.

In the judgment, the Member (Technical) noted that the appellant had cleared inputs as such on which cenvat credit was availed, initially and based on supplementary invoices. The appellant paid an amount equal to the credit taken for the first time but omitted to consider the credit from supplementary invoices. The Member found that the omission was not intentional to avoid duty payment, and as the amount with interest was paid promptly after the audit, no further proceedings were required under sub-section (2 B) of Section 11A. The show cause notice issued after three years invoked an extended period for demanding the amount, which was already paid by the appellant. Consequently, the judgment held that the penalty imposition was not sustainable, and the appeal was allowed on that ground.

This detailed analysis of the judgment highlights the issues of demand and recovery of cenvat credit, imposition of penalty, and the appeal outcome, providing a comprehensive understanding of the legal proceedings and decision rendered by the Appellate Tribunal CESTAT New Delhi.