Penalty for irregular Cenvat credit rejected where duty and interest were paid before notice and no intent to evade was shown.

Penalty was not warranted where irregular Cenvat credit was reversed and duty with interest was paid before issuance of the show cause notice after the discrepancy was detected in audit. The authorities found that the record did not establish suppression of facts, misdeclaration, or intent to evade duty, and treated the matter as one calling for waiver of penalty. The appellate forum accepted that concurrent factual finding and declined to interfere, leaving the penalty order unsustainable and the Revenue's challenge unsuccessful.

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Issues: Whether penalty was leviable when the assessee reversed the irregular Cenvat credit and paid duty and interest before issuance of the show cause notice after the irregularity was detected during audit, and whether any suppression or misdeclaration with intent to evade duty was established.

Analysis: The assessee had cleared goods to a 100% EOU on the basis of CT3 certificates while availing credit on control panels purchased as finished goods, and the credit was found to be irregular. However, the material on record showed that the mistake was pointed out during audit, and the assessee thereafter paid the duty and interest even before issuance of the show cause notice. In these circumstances, the authorities below held that the conduct did not disclose suppression of facts or misdeclaration with intent to evade duty, and that the case was one for waiver of penalty. The appellate forum found no reason to interfere with that factual finding.

Conclusion: Penalty was not leviable, and the Revenue's challenge failed.

Final Conclusion: The dispute was resolved on its facts in favour of the assessee, with the concurrent finding that the penalty order could not be sustained.

Ratio Decidendi: Where duty and interest are paid before issuance of the show cause notice after audit detection, and no suppression of facts or intent to evade duty is established, penalty is not warranted.

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