2018 (2) TMI 903 - AT - Central Excise

Interest on CENVAT credit wrongly availed - Held that - the appellant has on two occasions wrongly availed cenvat credit but reversed suo motu and on two occasions the appellant has reversed the credit after the same was pointed out by audit - Hon ble High Court of Bombay in the case of GL&V India Pvt. Ltd. 2015 (5) TMI 375 - BOMBAY HIGH COURT has held that the interest on cenvat credit wrongly availed is leviable irrespective of the fact that the said credit was utilized or not - demand upheld. Penalty under Section 11AC - Held that - the ingredients for imposing penalty under Section 11AC are not brought out by the proceedings and the lower authority - on two occasions, the credit was suo motu reversed by the appellant and on other two occasions, credit was reversed as soon as the same was pointed out by the audit - mala fides cannot be attributed - penalty set aside. Appeal allowed in part.

Summary

Issues:
- Disallowance of credit wrongly availed
- Confirmation of demand of interest
- Imposition of penalty

Disallowed Credit:
The appeal was filed against the disallowance of credit wrongly availed, confirmation of the interest demand, and imposition of penalty. The appellant argued that the wrongly availed credit was reversed either suo motu or after being pointed out during an audit. The counsel contended that no interest should be payable on the credit if it was not utilized. The Revenue relied on a Bombay High Court decision, arguing that interest is leviable even if the credit was not utilized.

Interest on Wrongly Availed Credit:
The Tribunal considered the appellant's actions of wrongly availing and subsequently reversing the credit. Referring to the Bombay High Court decision and the Supreme Court's judgment in a related case, the Tribunal held that interest on wrongly availed credit is leviable regardless of whether the credit was utilized or not. The Tribunal emphasized the binding nature of the legal precedents cited.

Imposition of Penalty:
Regarding the imposition of penalty under Section 11AC, the Tribunal found that the circumstances did not meet the requirements for imposing a penalty. The appellant had reversed the credit on their own initiative in some instances and promptly after audit findings in others. The Tribunal noted that the amounts involved were not significant relative to the appellant's size, and there was no evidence of mala fides. Consequently, the penalty was set aside, and the appeal was partly allowed in favor of the appellant.

This comprehensive analysis of the judgment highlights the issues of disallowed credit, interest on wrongly availed credit, and imposition of penalty, providing a detailed breakdown of the arguments presented, legal precedents cited, and the Tribunal's decision on each issue.