2010 (7) TMI 448

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..... return filed under Rule 7(6) of Cenvat Credit Rules, 2002 there is no justification for imposition of penalty of Rs. 2 lakhs and the same is liable to be set aside.
R.M.S. Khandeparkar, Shri Rakesh Kumar, JJ. REPRESENTED BY : Shri B.L. Narshimhan, Advocate, for the Appellant. Shri Virender Chaudhary, DR, for the Respondent. [Order per : Rakesh Kumar, Member (T) (Oral)]. - The facts leading to this appeal are, in brief, as under : 1.1 The appellant is manufacturer of cotton yarn and synthetic yarn of various counts chargeable to Central Excise duty under sub-heading 5205.11 and 5509.90 respectively of the Central Excise Tariff. They also availed cenvat credit of duty paid on inputs and capital goods used in or in relation to t .....

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..... mmissioner vide Order-in-Original dated 9-3-2005 by which the cenvat credit demand of Rs. 51,06,865/- was confirmed alongwith interest and besides this, penalty of Rs. 2 lakhs was also imposed on the appellant under Rule 13 of Cenvat Credit Rules, 2002. It is against this order of the Commissioner that the present appeal has been filed. 2. Heard both sides. 3. Shri B.L. Narsimhan, Advocate, learned Counsel representing the appellant, while conceding that the appellants were not eligible for the cenvat credit of Rs. 51,06,865/- of the duty paid on the cotton yarn and synthetic yarn at the time of de-bonding, pleaded that since on the same day i.e. on 26-11-2002, the entire stock of cotton yarn and synthetic yarn has been cleared on pa .....

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..... , therefore were not eligible for cenvat credit. However, we find that the entire stock of the cotton yarn and synthetic yarn was cleared on the same day i.e. 26-11-2002 on payment of duty amounting to Rs. 65,73,153/- and thus the entire amount of cenvat credit stood reversed on the day on which the same has been taken. In view of this, while cenvat credit demand has been rightly confirmed by the Commissioner, there would be no occasion to charge interest as cenvat credit has been stood reversed on the same day on which the same has been taken. 7. As regards the penalty, looking to the fact that the cenvat credit was reversed on the same day on which it had been taken and its availment was declared in the ER-1 return as well as in the .....

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