Bona fide double Modvat credit mistake: penalty and interest cannot be invoked without intent to evade duty.

Penalty and interest are not attracted where Modvat credit is taken twice on prescribed documents because of a bona fide mistake and the excess is later reversed on detection. The duplication arose from credit being taken once on invoices and again on a supplier's 57E certificate countersigned by the jurisdictional Superintendent. In the absence of mens rea or deliberate intent to evade duty, the conditions for penalty under Rule 57AH, interest under Section 11AB, and invocation of Section 11AC were not satisfied.

---

---

Issues: Whether penalty and interest were sustainable where Modvat credit was taken twice on the basis of stipulated documents and the excess credit was later reversed on detection of the error.

Analysis: The credit had been taken once on invoices and again on a 57E certificate issued by the supplier and countersigned by the jurisdictional Superintendent. The record indicated that the duplication arose from a bona fide mistake and not from any intention to evade duty. In the absence of mens rea or deliberate violation, the conditions for penalty under Rule 57AH and for interest under Section 11AB were not made out, and the invocation of Section 11AC was also unsustainable.

Conclusion: Penalty and interest were not leviable and the assessee succeeded on this issue.

Ratio Decidendi: Where excess Modvat credit is taken on the basis of prescribed documents due to a bona fide mistake and there is no intent to evade duty, penalty and interest provisions cannot be invoked.

---