Settlement of inadmissible CENVAT credit: duty and interest settled, with limited penalty relief and prosecution immunity granted.

Admitted inadmissible CENVAT credit and corresponding interest were treated as settled under the statutory settlement scheme because the dues had been fully paid and the Revenue raised no objection after verification. The Commission granted settlement of duty and interest accordingly. Because the credit had been knowingly availed, total immunity from penal consequences was declined; however, prompt payment, cooperation during investigation and settlement, and unconditional clearance of the goods were treated as mitigating factors. Fine was not imposed, limited penalty relief was granted, and immunity from prosecution was granted under the settlement provisions.

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Issues: (i) Whether the inadmissible CENVAT credit and interest liability stood settled on the facts of the case and whether the applicant was entitled to settlement under the statutory settlement scheme; (ii) Whether fine, penalty and prosecution could be waived or immunity granted in view of the admitted wrongful availment of credit, payment made, and co-operation extended.

Issue (i): Whether the inadmissible CENVAT credit and interest liability stood settled on the facts of the case and whether the applicant was entitled to settlement under the statutory settlement scheme.

Analysis: The liability to duty and interest was admitted and had been discharged in full before settlement. The material on record showed that the applicant had availed CENVAT credit on invoices without receipt of the corresponding goods, and the Revenue had no objection to settlement on the duty and interest component after verification of payment. The statutory conditions for settlement were thus treated as satisfied, and the Commission settled the duty and interest amounts accordingly.

Conclusion: The duty and interest liabilities were settled and the application was allowed to that extent.

Issue (ii): Whether fine, penalty and prosecution could be waived or immunity granted in view of the admitted wrongful availment of credit, payment made, and co-operation extended.

Analysis: The Commission found that the applicant had knowingly availed inadmissible credit, so total immunity was not warranted. At the same time, prompt payment of the dues, full co-operation during investigation and settlement, and the circumstance that the goods had already been cleared unconditionally were treated as mitigating factors. On that basis, the impugned goods were held liable to confiscation but fine was held not attracted, immunity from penalty was granted beyond specified amounts, and immunity from prosecution was granted under the settlement provisions.

Conclusion: Fine was not imposed, limited penalty relief was granted, and immunity from prosecution was granted.

Final Conclusion: The dispute was conclusively settled with full discharge of duty and interest, denial of total immunity, and grant of substantial but limited relief on fine, penalty and prosecution.

Ratio Decidendi: In settlement proceedings, admitted and fully paid duty and interest may be settled while total immunity from penal consequences can be refused where inadmissible credit was knowingly availed, though mitigating circumstances may justify partial immunity and denial of fine when the goods were already unconditionally cleared.

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