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2016 (11) TMI 351 - AT - Central ExciseDenial of credit taken on capital goods - imposition of penalty u/s 27 - Held that - the appellant has availed the credit on the capital goods without receiving the same in the factory. Although the appellant was not going to gain any benefit by taking the credit on the capital goods which has not been received in the factory. There is procedural lapse on the part of the appellant. For this the penalty under section 27 is imposable on the appellant - penalty of 5, 000/- imposed on appellant. Denial of re-credit - time barred - re-credit of excess amount debited in the RG-23A Part II register - Held that - reliance placed on the decision of SWASTIK SANITARYWARES LTD Versus UNION OF INDIA 2012 (11) TMI 149 - GUJARAT HIGH COURT where it was held that the claim of the petitioners seeking repayment of such amount cannot be seen as a refund claim made under section 11B of the Act - the appellant entitled to take suo-moto credit of excess amount debited in their RG-23A Part II register. Appeal disposed off - decided partly in favor of appellant.
Issues:
1. Availing credit on capital goods without receiving them. 2. Imposition of penalty for availing inadmissible credit. 3. Entitlement to take suo-moto credit of excess amount debited. Issue 1: Availing credit on capital goods without receiving them The appellant, a unit in Jammu and Kashmir, availed credit on capital goods based on invoices in April 2009, October and November 2010. The preventive officer objected, leading the appellant to reverse the credit with interest. A show cause notice was issued, and after adjudication, a penalty was imposed for the credit taken on capital goods without receiving them. The appellant argued that they were entitled to a refund of the duty paid in the same month and had no intention to take inadmissible credit. However, the tribunal found a procedural lapse and imposed a penalty of ?5,000 under section 27 for availing credit on capital goods not received. Issue 2: Imposition of penalty for availing inadmissible credit The appellant contended that they should not be penalized as they were not gaining any benefit from the credit on capital goods not received. The tribunal, however, held that there was a procedural lapse on the appellant's part, justifying the imposition of a penalty. The penalty of ?5,000 was upheld based on the appellant's failure to follow proper procedures despite not benefiting from the credit. Issue 3: Entitlement to take suo-moto credit of excess amount debited The appellant sought to take suo-moto credit for the excess amount debited in their RG-23A Part II register, citing a decision of the Hon'ble Gujarat High Court. The tribunal agreed with the appellant, referring to the Gujarat High Court's observation that in cases where an amount was mistakenly deposited with the government, the revenue cannot retain it. Therefore, the appellant was entitled to take suo-moto credit of the excess amount debited. Consequently, the tribunal allowed the appellant to take credit and imposed a penalty of ?5,000 for the procedural lapse in availing credit on capital goods not received. In conclusion, the tribunal upheld the penalty for availing credit on capital goods not received while allowing the appellant to take suo-moto credit of the excess amount debited. The appeal was disposed of with the appellant being entitled to the credit and a penalty of ?5,000 for the procedural lapse.
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