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2016 (9) TMI 362 - AT - Central ExciseCenvat credit - availed amounting to ₹ 1,35,133/- involved on the inputs lying in stock and the inputs contained in the finished goods as on that date - input quantity involving credit of ₹ 61,953/- was not available in stock as on 14.03.2011 - Imposition of penalty - Held that - I do not find any reason to interfere with the finding of the learned Commissioner (Appeals) that the CENVAT Credit of ₹ 61,953/- is inadmissible against the total claim of ₹ 1,35,133/-. However, the Appellants should have been allowed to exercise option to pay 25% of the penalty subject to conditions laid down under Section 11AC of Central Excise Act, 1944, in view of the observation of the Hon ble Gujrat High Court in the case of CCE Vs Harish Silk Mills 2010 (2) TMI 494 - GUJARAT HIGH COURT and CCE Vs G.P.Presstress Concrete Works 2012 (8) TMI 933 - GUJARAT HIGH COURT . Accordingly, the appeal is remanded to the Adjudicating authority to consider the option of payment of 25% of the penalty on fulfillment of the conditions laid down under Section 11AC of Central Excise Act, 1944. - Decided partly in favour of assessee
Issues:
- Disallowance of CENVAT Credit on inputs - Imposition of penalty without offering the option to pay 25% Analysis: Issue 1: Disallowance of CENVAT Credit on inputs The case involved the disallowance of CENVAT Credit amounting to ?61,953/- against a total claim of ?1,35,133/- by the Appellant, who was engaged in the manufacture of Steel Wire falling under Chapter 72 of the Central Excise Tariff Act, 1985. The Appellant registered with the Central Excise department and requested CENVAT Credit on inputs lying in stock and finished goods as of the registration date. However, upon verification, it was found that the input quantity involving credit of ?61,953/- was not available in stock as claimed. The Adjudicating authority confirmed the demand and imposed a penalty, which was upheld by the Commissioner (Appeals). The Appellant argued that the denial of CENVAT Credit based on the age of input invoices was unjustified. The Adjudicating authority found that the Appellant failed to provide concrete evidence supporting their claim for the CENVAT Credit. It was noted that a significant portion of the raw material consumed was non-cenvatable, and the Appellant could not establish the missing inputs were against cenvatable invoices. The Commissioner (Appeals) supported this finding after analyzing the evidence on record. Referring to Rule 3(2) of the CENVAT Credit Rules, 2004, it was emphasized that CENVAT Credit is allowed on inputs lying in stock or in process, or inputs contained in final products lying in stock at the time goods cease to be exempted or become excisable. The Appellant's failure to provide substantial evidence led to the conclusion that the disallowance of the CENVAT Credit was justified. Issue 2: Imposition of penalty without offering the option to pay 25% While upholding the disallowance of CENVAT Credit, the Appellate Tribunal noted that the Appellants were not offered the option to pay 25% of the penalty as per Section 11AC of the Central Excise Act, 1944, read with Rule 15 of the CENVAT Credit Rules, 2004. Citing precedents from the Hon'ble Gujarat High Court, the Tribunal remanded the case to the Adjudicating authority to consider allowing the Appellants the opportunity to pay 25% of the penalty, subject to fulfilling the conditions specified under the relevant provisions. The impugned order was modified to include this aspect, and the appeal was partly allowed on this ground. In conclusion, the Tribunal upheld the disallowance of CENVAT Credit due to lack of evidence but directed the Adjudicating authority to reconsider the penalty imposition by offering the Appellants the option to pay 25% of the penalty as per the statutory provisions and relevant case law.
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