2019 (1) TMI 701 - AT - Central Excise

Penalty - CENVAT Credit on removal of capital goods after use - Rule 3 (5A) of Cenvat Credit Rules - appellant s contention that they were not aware of the legal position that they have to pay the duty at the time of clearance of the Cenvatable Capital Goods - duty paid with interest paid on being pointed out - Held that - There is no dispute on the facts that admittedly the clearances of the transformer was by raising an invoice in which case, it cannot be said that there was any mala fide on the part of the assessee to suppress the fact of clearance of the transformer. Non-payment duty by itself cannot lead to ipso facto presence of any mala fide - Tribunal in the case of Commissioner of Central Excise & Customs, Aurangabad vs. Shrigonda Sahakari Sakhar Karkhana Ltd. 2014 (6) TMI 940 - CESTAT MUMBAI in similar circumstances, set aside the penalty imposed upon the assessee. Penalty set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Availing Cenvat Credit on Transformer
2. Clearance of Transformer without paying duty
3. Imposition of penalty by Appellate Authority

Analysis:
1. The appellant, engaged in manufacturing MS Shapes and Sections, availed Cenvat Credit on a Transformer. Subsequently, the Transformer was cleared without paying the full duty, leading to a show cause notice and demand confirmation by the Original Adjudicating Authority. The appellant paid the due duty and interest before the notice was issued.

2. The Original Adjudicating Authority confirmed the demand but did not impose a penalty, considering the duty payment before the notice. However, the Revenue appealed for penalty imposition, contending mala fide suppression by the appellant in clearing the goods without reflecting in their ER-1 return. The Appellate Authority imposed a penalty under Section 11AC (c) of the Central Excise Act.

3. The appellant argued lack of awareness about the duty payment requirement at clearance, emphasizing prompt duty payment upon audit notification. They asserted no mala fide intent and cited tribunal decisions. The Tribunal found no mala fide in the clearances, citing a precedent where a penalty was set aside in similar circumstances.

4. The Tribunal, after considering the facts and legal arguments, concluded that there was no justification for imposing a penalty on the appellant. The impugned order of the Commissioner (Appeals) was set aside, and the appeal was allowed by restoring the Original Adjudicating Authority's order.

This judgment highlights the importance of prompt duty payment upon audit notification, lack of mala fide intent in non-payment, and the Tribunal's discretion in penalty imposition based on specific circumstances and legal precedents.