2013 (9) TMI 502 - AT - Central Excise

Penalty upheld for repeated excess credit use despite appellant's bona fide error claim

The Tribunal upheld the imposition of penalty under section 11AC of the Central Excise Act on the appellant for repeatedly availing excess credit on ... Penalty under Section 11AC of Central Excise Act, 1944 - Availed excess credit than the duty paid on the documents under which the inputs were received – Bonafide mistake of the excise clerk – Held that:- Annexure to the Show Cause Notice dated 19.05.2008 shows there are 54 instances where the appellant has taken excess credit - Show Cause Notice dated 05.12.2007 there are four instances where the appellant availed credit - Appellant also utilized the credit - Repeated action of the appellant of taking credit on the value of goods and not of the duty paid on the goods, 62 times and also utilizing the excess credit for payment of duty - Deserves penalty under section 11AC of the Central Excise Act – Decided against the Assessee. Issues:- Appellant availed excess credit of duty paid on inputs- Contention of appellant regarding mistake and intention to evade payment of duty- Imposition of penalty under section 11AC of the Central Excise ActAnalysis:1. Appellant availed excess credit of duty paid on inputs:The appellants were involved in processing cotton/manmade fabrics under the CENVAT scheme. Two show cause notices were issued to the appellant for availing excess credit compared to the duty paid on the documents related to the inputs received. The adjudicating authority confirmed the demand for duty along with interest and imposed a penalty under section 11AC of the Central Excise Act.2. Contention of appellant regarding mistake and intention to evade payment of duty:The appellant argued that the excess credit availed was due to a mistake made by their excise clerk, and it was a bona fide error. They contended that there was no intention to evade duty payment as they had subsequently paid the duty along with interest. The appellant challenged only the imposition of penalty under section 11AC of the Central Excise Act.3. Imposition of penalty under section 11AC of the Central Excise Act:The Revenue presented instances where the appellant had availed excess credit and utilized it for duty payment, indicating a willful intention to evade duty payment. The appellant, on the other hand, claimed that there were only a few instances of excess credit utilization and that they had rectified the mistake by paying the duty and interest. However, the Tribunal found that the appellant had repeatedly taken excess credit on multiple occasions and utilized it for duty payment, leading to the dismissal of the appeals and upholding the imposition of penalty under section 11AC of the Central Excise Act.