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TMI Blog2019 (8) TMI 674X X X X Extracts X X X X X X X X Extracts X X X X ..... 014 were issued alleging irregular availment of Cenvat Credit on input stored outside the factory in contravention of Rule 8 of the Cenvat Credit Rules, 2004 and Trade Notice No.93/2004 of Commissioner of Central Excise, Ahmadabad-III. It was alleged that the appellant had taken credit on the basis of 90 number(s) of invoices for which goods were received in the storage premises outside factory, instead of availing the Credit on the inputs at the time when the entire quantity of inputs were brought to the factory. The Ld. Commissioner vide the impugned Order-in-Original dated 28.04.2017, while appreciating the fact that the appellant was legally entitled to avail and utilize the Credit in question, dropped the proposal for recovery of credit amounting to Rs. 4,18,06,826/-. He however observed that there was a procedural irregularity in availing the credit on inputs stored outside the factory and accordingly, imposed penalty and interest. 3. Sri Rajeev Kr. Agarwal, C.A. appeared for the appellant and Shri K. Chowdhury, Supdt. (AR) appeared for the Revenue. 4. The Ld. CA appearing for the appellant drew my attention to the findings made by the Ld. Commissioner in Para 5.10, pg. n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ission of the Ld. Counsel that in the instant case, two financial years are not involved and that even after excluding irregular availment of credit which is in dispute, sufficient balance of credit was available and hence there was no loss to the government exchequer. He submitted that penalty of Rs. 5,00,000/- imposed in their case is arbitrary and bad in law as the same has been invoked under Rule 15(2) of CCR, 2004 and there is no fraud or suppression in their case. He emphasized that there is a categorical finding of the Ld. Commissioner that the procedural irregularity in availment of credit was duly reflected in ER-1 returns and hence the allegation of suppression of facts cannot be sustained. Moreover, there is no basis as to how the huge penalty amount of Rs. 5 lakhs has been quantified. 7. In support of his submissions he relied upon the following decisions:- * Savio India Ltd. v. Commr. of Customs and C.EX and S.Tax, Coimbatore 2016 (340) ELT 735 (Tri-Chennai) * Commr. of C.Ex., Puducherry Commissionerate vs. CESTAT, Chennai [2016 68 taxmaan.com 193 (Madras)]. * CCE, Delhi vs. Maruti Udyog Limited [2007 (214) E.L.T. 173 (P & H)] upheld by the Hon'ble Supreme C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppearing for the Revenue supported the findings made by the Ld. Commissioner and submitted that the assessee appellant was given a special facility to store the goods outside the factory by way of a specific permission in terms of which it was obliged to avail credit only when the entire goods covered by a single excise invoice was entered into the factory following the Trade Notices issued in that regard, and that it could not pre-maturely avail credit. He submitted that since the appellant has already paid interest in the course of adjudication, it cannot dispute the imposition of interest in this appeal and the said payment has been rightly appropriated in the adjudication order towards adjudged dues. He emphasized that the mere fact that there was a sufficient credit balance will not absolve the assessee from imposition of interest and penalty. He relied on the decision of the Tribunal in the case of Madras Cements Ltd. vs. CCE, Hyderabad 2016 (336) ELT 175 (Tri-Hyd) wherein it has been held that interest is payable in case of premature availment of credit as the credit of balance 50% should be availed in subsequent year in case of procurement of capital goods. Based on the abo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... find no reason to sustain the imposition of penalty and hence set aside the same. 11.2. Now I take up the second issue with regard to interest. It is noted that the Ld. Commissioner in Para 5.10 of the order has categorically observed that the assessee had sufficient credit balance, excluding the Cenvat credit availed and utilized on the subject invoices in dispute. Thus, the fact that adequate credit balance is available during the material period and is not in dispute. Despite that credit has been pre-maturely reflected in the RG-23 register and ER-1 return since goods were not received in the factory, there is no consequent short payment of duty and hence no loss to exchequer. I find that the decision of the Tribunal in the case of KRCD Ltd (Supra) relied by the Ld. Commissioner in para 5.13 for imposition of interest pertained to the situation where the assessee had taken 100% credit for receipt of capital goods, in place of 50% in the year of receipt of goods which was the maximum entitlement, resulting short payment of output duty causing loss to the exchequer. The decision in the aforesaid case of KRCD Ltd (Supra) is therefore not applicable to the facts of the present cas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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