2017 (6) TMI 891 - AT - Central Excise

Penalty - irregular availment of CENVAT credit - case of appellant is that they are not laible to penalty as they have not utilized these credits and they have paid the amount as soon as the Department pointed out to them - Held that - In pursuance of the direction of the Tribunal, the appellant paid the interest on 27.03.2012 - Since the appellants have paid the amount wrongly availed along with interest and the Revenue has not been able to bring any evidence on record to show that there was any intention on the part of the appellant to evade the demand of excise duty, therefore, there is no justification for imposing penalty and therefore the impugned order to the extent of imposing penalty is not sustainable in law - appeal allowed - decided in favor of appellant.

Summary

Issues: Appeal against rejection of appeal, availing cenvat credit on outward GTA, input service, and raw materials, amortization of die cost, imposition of penalty.

Analysis:
- The appeal was directed against the order rejecting the appellant's appeal and upholding the Order-in-Original. The audit revealed irregularities in availing cenvat credit on outward GTA, input services not received by the unit, credit without receipt of raw materials, and failure to amortize die cost into product value as required by Central Excise Valuation Rules, resulting in duty underpayment. The appellant reversed the irregularly availed amounts upon audit notification. A show-cause notice was issued for duty demand, interest, and penalty under Central Excise Law. The original authority confirmed the demand, imposed a penalty of ?8,32,190 under Cenvat Credit Rules, 2004 read with Central Excise Act, 1944. The appellant contended not owing interest as credits were unused and paid upon notification. The Commissioner dismissed the appeal.

- The appellant argued that they wrongly availed cenvat credit on outward transportation, but upon audit notification, reversed the entire credit before the show-cause notice, citing precedents. Similarly, for input credit on common services, the appellant reversed the credit before the notice, relying on legal decisions. Regarding cenvat credit without raw material receipt, the appellant reversed the amount upon audit notification, complying with Excise Law timelines. The appellant also addressed the failure to amortize die cost, reversing the amount before the notice and paying interest as directed by CESTAT.

- The Tribunal considered submissions, noting the appellant's reversal of wrongly availed credits before the show-cause notice. The appellant paid the interest but contested penalties. As there was no evidence of intent to evade duty, the Tribunal found no justification for imposing penalties. Consequently, the penalty imposition was set aside, allowing the appeal.

- The Tribunal pronounced the operative part of the order on 11/01/2017, setting aside the penalty imposition due to the appellant's reversal of irregularly availed amounts, payment of interest, and absence of evidence indicating intent to evade duty.