2018 (8) TMI 1333 - AT - Central Excise

Penalty u/s 11AC - CENVAT Credit availed on goods transferred to another company - supplementary invoices - Whether penalty under Section 11AC of the Central Excise Act, 1944 is imposable on the respondent for availing CENVAT Credit on supplementary invoices when goods were already transferred earlier to their another company? Held that - Even though the respondent initially availed credit on the supplementary invoices pertaining to the entire quantity of inputs received from the inputs supplier on payment of differential duty, but later on realizing the mistake, reversed the credit attributable to the quantity cleared as such to another unit namely, M/s Ispat Metallic India Ltd. - there is no justification to invoke penalty provision namely, Section 11AC of the Central Excise Act - appeal dismissed - decided against Revenue.

Summary

Issues:
Imposition of penalty under Section 11AC of the Central Excise Act for availing CENVAT Credit on supplementary invoices when goods were already transferred earlier.

Analysis:
The appeal was filed by the Revenue against an Order-in-Appeal passed by the Commissioner of Central Excise (Appeals), Mumbai. The main issue in question was whether penalty under Section 11AC of the Central Excise Act, 1944 was applicable on the respondent for availing CENVAT Credit on supplementary invoices after the goods had already been transferred to another company. The Revenue argued that the respondent should not have availed the credit on inputs that were already transferred to another unit, and thus penalty under relevant rules should be imposed. On the other hand, the respondent contended that there was a mistake in availing credit on the supplementary invoices, and the penalty should not be imposed as there was no mala fide intention.

During the hearing, both sides presented their arguments, and the records were examined. The Revenue challenged the order of the learned Commissioner (Appeals) for not imposing the penalty under Section 11AC of the Central Excise Act. However, upon review of the facts, it was observed that the respondent initially availed credit on the supplementary invoices for the entire quantity of inputs, but later corrected the mistake by reversing the credit related to the quantity cleared to another unit. It was concluded that there was no suppression of facts in availing credit on the supplementary invoices, as the mistake was rectified promptly.

Considering the circumstances and the lack of justification to invoke the penalty provision under Section 11AC of the Central Excise Act, the Tribunal dismissed the Revenue's appeal. The decision was made based on the understanding that there was no deliberate intention to evade or manipulate the credit system, and the mistake was rectified in due course.