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TMI Blog2010 (8) TMI 342X X X X Extracts X X X X X X X X Extracts X X X X ..... e had availed credit of ₹ 6,05,627 with intention to evade payment of duty. - The assessee had not utilize the impugned credit. - penalty vacated. - 395 OF 2007 - 1119/2010 - Dated:- 13-8-2010 - M.V. RAVINDRAN, P. KARTHIKEYAN, JJ. ORDER P. Karthikeyan, Technical Member This appeal filed by M/s. Flextronics Technologies (I) Pvt. Ltd. seeks to vacate penalty of Rs. 6,00,000 imposed on them under Rule 13 of Cenvat Credit Rules, 2002 (CCR) read with section 11AC of the Central Excise Act, 1944 (the Act) and applicable interest demanded from them under Rule 12 of the CCR read with section 11AB of the Act on amounts of Cenvat credit found to have been availed by them irregularly during the years 2002-03 and 2003-04. The facts of the case are that during audit of records of the assessee, the following discrepancies/irregularities were noticed : (a) Irregular availment of Cenvat credit on sales returns without any invoices during December 2002 and February 2003 involving duty amount of Rs. 3,37,041.00; (b) Availed Cenvat credit on Bills of Entry pertaining to the import of inputs used in the manufacture of exempted products involving duty amount of Rs. 1,14,47 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 52,440 relatable to Aluminium tables received by the appellants. As regards interest liability, the Commissioner held that this liability arose due to operation of law under Rule 12 of the CCR read with section 11AB of the Act. The appellants had taken huge amounts of Cenvat credit not due to them intentionally and reversed the same on being pointed out by the audit party in April 2004. Accordingly she imposed a penalty of Rs. 6,00,000 on the appellants under Rule 13 of the CCR read with section 11AC of the Act. In the appeal filed before the Tribunal the assessee has challenged the impugned order to the extent it imposed penalty of Rs. 6,00,000 on it and confirmed the demand of interest for late reversal of irregular Cenvat credit availed. The appeal also seeks to vacate denial of Cenvat credit of Rs. 1,52,440 relatable to Aluminium tables and demand of the same. 3. As regards the denial of credit on Aluminium tables, the appellants have contended that the Central Excise authorities having jurisdiction over the assessee which received capital goods/inputs were not competent to reclassify the goods originating from a manufacturer subject to jurisdiction of different Central Excis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of facts or fraud or wilful mis-statement, collusion or contravention of any of the provisions of the Act or the Rules made thereunder with intention to evade payment of duty. Therefore, the penalty envisaged under Rule 13 of the CCR read with section 11AC of the Act was not imposable on them. They relied on the following case laws among others : (i) CCE v. Chetna Cement (P.) Ltd. [Appeal No. E/2000/2005-Mum., dated 8-9-2006] (ii) RGR Pharmaceuticals v. CCE 2007 (211) ELT 313 (Trib. - Delhi) (iii) Flex Industries Ltd. v. CCE 2003 (151) ELT 198 (Trib. - Delhi) (iv) Aurobindo Pharma Ltd. v. CCE 2002 (52) RLT 943 (Trib. - Bang.) (v) Jamna Auto Industries Ltd. v. CCE 2001 (130) ELT 181 (Trib. - Delhi) (vi) Nahar Spinning Mills Ltd. v. CCE 2000 (121) ELT 400 (Trib. - Delhi). More judicial authorities are cited to challenge the penalty on the ground that penalty could not be imposed as a matter of course without establishing cogent and reliable evidence that proved beyond reasonable doubt the existence of culpable mental state . The impugned order sought to impose penalty merely because the law empowered such imposition. One of the relied upon judgments is Hindustan Steel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for our consideration are discussed below : (i) As regards the entitlement of the assessee to capital goods credit of Rs. 1,52,440 paid on Aluminium tables received by it, we find that Aluminium tables received by the appellants were classified under Chapter Heading 8537. The manufacturer had assessed the same to duly appropriate to goods falling under Chapter Heading 8537. The appellants had taken credit on the strength of Central Excise invoices issued under the relevant provisions in the CCR. We find that the appellants had availed credit of duty paid on the Aluminium tables in accordance with law. The Commissioner had sought to disallow the impugned credit on the finding that Aluminium tables involved were correctly classifiable under Chapter Heading 9403 and such goods were not covered by the definition of capital goods. We find that the Commissioner having jurisdiction over the recipient assessee is not competent to revise that classification and assessment of the goods reflected in the Excise invoices under cover of which the capital goods/inputs are received by an assessee. This position is no longer res integra. In the various case laws relied on by the appellants, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llows : In a case where the CENVAT credit has been taken or utilized wrongly on account of fraud, wilful mis-statement, collusion or suppression of facts, or contravention of any of the provisions of the Act or the rules made thereunder with intention to evade payment of duty, then, the manufacturer shall also be liable to pay penalty in terms of the provisions of section 11AC of the Act. We observe that these provisions can be invoked only in a case where an assessee has taken or utilized Cenvat credit wrongly on account of fraud, wilful mis-statement, collusion or suppression of facts, or contravention of any of the provisions of the Act or the Rules made thereunder with intention to evade payment of duty. In the instant case, the assessee had taken the wrong credit in their account but did not utilize the same. The assessee had claimed that they happened to take wrong credit inadvertently despite the safeguards put in place in its organization. They had reversed the irregular credit immediately on being pointed out by the authorities. Though the show-cause notice had alleged that the appellants had taken irregular Cenvat credit by suppression of facts, the Commissioner co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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