Tribunal overturns penalty for mistaken duty credit, citing transparency and cooperation.

The Tribunal set aside the penalty imposed on the appellant for mistakenly taking excess credit of countervailing duty (CVD) on imported furnace oil. The appellant promptly reversed the excess credit upon realization of the error, demonstrating transparency and cooperation with department officers. As the excess credit was not utilized and there was no mala fide intention, the Tribunal deemed the penalty imposition unjustified and granted consequential relief in favor of the appellant.

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Appellant imported furnace oil paying basic customs duty and countervailing duty (CVD). Appellant was entitled to take Modvat credit of CVD of Rs. 69,397 but "took credit of entire duty i.e. basic as well as CVD." On being pointed out by Revenue, appellant admitted excess credit and "immediately reversed the same"; the excess credit remained unutilized until reversal. Proceedings led to imposition of penalty to the extent of "100%". Tribunal finds the excess credit was taken "by mistake" and there was no "mala fide" intention. The fact that the excess credit was unutilized and promptly debited when pointed out, together with the availability of departmental scrutiny, militates against attributing mala fide. Consequently, imposition of penalty is held unjustified; the penalty is set aside and both appeals are allowed with consequential relief to the appellants.

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