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TMI Blog2011 (3) TMI 564X X X X Extracts X X X X X X X X Extracts X X X X ..... ay (no such delay is proved in this case) can not imply that there was an intention to evade duty by not reversing the credit taken on the input. - Appeal is allowed - E/2689/2009 - 176/2011-SM(BR)(PB) - Dated:- 24-3-2011 - Shri Mathew John, J. REPRESENTED BY : Shri Hemant Bajaj, Advocate, for the Appellant. Shri Anil Khanna, SDR, for the Respondent. [Order]. The Appellants are manufacturers of bulk drugs. They avail Cenvat credit on inputs used in the manufacture of their final products. 2. They had availed Cenvat credit on certain inputs. Later the quality control store department rejected the impugned inputs on 3-12-2002. On the same day the Central Excise Officers found a report titled Status of Obsolete, Slow M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the department has not been able to prove any mala fide intention on the part of the Appellants not to reverse the credit. 5. The department s contention is that they reversed the credit only when the Appellants were caught on the wrong foot. The Commissioner (Appeal) has relied on the decision of Tribunal in ADM India Enterprises v. CCE, Delhi - 2008 (12) S.T.R. 127. Further the Commissioner (Appeal) relied on the decision of the Supreme Court in Dharamendra Textile Processors - 2008 (231) E.L.T. 3 (S.C.) and held that for imposition of penalty under Section 11AC, mens rea is not an essential ingredient. 6. The sole question to be decided in this case is whether the Appellant had intention to evade the duty involved in the obsolete i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o pay a penalty equal to the duty so determined: 8. It is very clear from the above provision that for imposing penalty under this section short levy of duty should have arisen by reasons of fraud, collusion or any willful mis-statement or suppression of facts. Further in cases involving contravention of any other provisions of rules penalty is to be imposed only if such contravention is made with Intention to evade payment of duty. So the statute makes it very clear that mens rea has to be proved before imposing penalty under this section. 9. In this case an internal control process of the company resulted in identifying that of some of the inputs had become unusable. The company was in the process of writing off such inputs in their ..... X X X X Extracts X X X X X X X X Extracts X X X X
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