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2021 (4) TMI 683 - AT - Central ExciseLevy of penalty - wrongful availment of CENVAT Credit - appellant immediately, on being pointed out, reversed the ineligible credit along with interest and the same has been appropriated - HELD THAT - The appellant who is a State Government Undertaking has inadvertently availed the cenvat credit which on being pointed out by the audit reversed the same along with interest which fact is not in dispute and the Order-in-Original appropriated the amount and the interest paid by the appellant. Further, it is a settled position of law that no suppression of material to evade payment of duty can be alleged against the State Government Undertaking. This issue has been consistently considered by the Tribunal in the case of YCH LOGISTICS (INDIA) PVT. LTD. VERSUS C.C.E C.S.T. -BANGALORE SERVICE TAX- I 2020 (3) TMI 809 - CESTAT BANGALORE and it has been held that once the duty is paid before the issuance of show-cause notice along with interest, the show-cause notice need not be issued and question of imposition of penalty does not arise. Penalty set aside - appeal allowed - decided in favor of appellant.
Issues:
Appeal against penalty imposed for availing ineligible cenvat credit on imported inputs. Detailed Analysis: The appeal was filed against an order passed by the Commissioner (Appeals) upholding the penalty imposed for availing cenvat credit on imported inputs. The appellant, a Kerala Government Undertaking, had inadvertently availed cenvat credit of basic Customs duty on imported inputs, which was pointed out during an internal audit. The appellant immediately reversed the ineligible credit along with interest before the issuance of a show-cause notice. A show-cause notice was later issued proposing to demand the ineligible credit, interest, and imposing a penalty under Rule 15(2) of Cenvat Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944. The original authority confirmed the demand, appropriated the amount paid by the appellant, and imposed a penalty. During the hearing, the appellant's counsel argued that the impugned order was not sustainable as the appellant had rectified the mistake promptly after it was highlighted by the audit. The appellant, being a State Government Undertaking facing financial difficulties, had no intention to evade duty payment. The counsel cited various judicial decisions in support of the argument. On the other hand, the learned AR defended the impugned order. After considering the submissions and evidence on record, the Tribunal found that the appellant, being a State Government Undertaking, had inadvertently availed the cenvat credit, which was promptly reversed along with interest. The Tribunal noted that no intention to evade duty payment could be alleged against a State Government Undertaking. Citing previous decisions, the Tribunal held that once duty is paid along with interest before the issuance of a show-cause notice, the question of imposing a penalty does not arise. Referring to a specific case, the Tribunal highlighted that if tax is paid along with interest before the issuance of a show-cause notice, the notice shall not be issued. The Tribunal also mentioned a Karnataka High Court case supporting the view that no penalty is imposable when duty is paid along with interest before the show-cause notice. Based on the legal precedents and the specific circumstances of the case, the Tribunal set aside the penalty imposed on the appellant, concluding that the impugned order imposing the penalty was not sustainable in law. The appeal of the appellant was allowed, and the penalty was revoked. In conclusion, the Tribunal's decision focused on the inadvertent nature of the mistake, the prompt rectification by the appellant, the absence of intent to evade duty payment, and the legal precedent supporting the non-imposition of a penalty when duty is paid along with interest before the issuance of a show-cause notice.
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