Appeal allowed, demand set aside, interest payment ordered, no penalty imposed.

The Tribunal allowed the appeal, setting aside the demand for cenvat credit of Rs. 7,95,986. The appellant was directed to recalculate the admissible credit year-wise and pay interest on the excess amount within sixty days. No penalty was imposed despite the denial of cenvat credit, focusing on rectification and interest payment without additional penalties.

---

---

Issues involved:
Availing 100% cenvat credit instead of 50% on capital goods; Denial of cenvat credit of Rs. 7,95,986; Demand for interest; Imposition of penalty.

Availing 100% cenvat credit instead of 50% on capital goods:
The appellant had availed 100% cenvat credit on capital goods received over three financial years instead of the entitled 50%. The impugned order denied and demanded Rs. 7,95,986 as cenvat credit, without imposing a penalty. The advocate argued that the denial was unnecessary as the appellant could have been asked to calculate the eligible credit for each year and pay interest on the excess amount. The Tribunal agreed with the advocate's submission, acknowledging that the appellant should only pay interest on the inadmissible credit and directed them to recalculate the credit admissible year-wise and pay the interest within sixty days.

Denial of cenvat credit of Rs. 7,95,986:
The Tribunal found that demanding the entire amount of Rs. 7,95,986 as cenvat credit was unnecessary. Instead of denying the credit outright, the appellant should have been asked to calculate the eligible credit for each year and pay interest on the excess amount. The Tribunal accepted the advocate's offer to recalculate the admissible credit and directed the appellant to pay the interest within sixty days, setting aside the demand for cenvat credit.

Demand for interest:
The Tribunal acknowledged that the appellant was liable to pay interest on the excess cenvat credit availed. The advocate undertook to calculate the interest and pay it within two months. The Tribunal accepted this proposal and directed the appellant to calculate the interest payable along with the admissible credit year-wise and report compliance to the Central Excise office within sixty days.

Imposition of penalty:
Notably, no penalty was imposed on the appellant despite the denial of cenvat credit and the demand for interest. The Tribunal's decision focused on rectifying the error in availing the cenvat credit and ensuring the payment of interest, without imposing any additional penalties on the appellant.

In conclusion, the Tribunal allowed the appeal, setting aside the demand for cenvat credit of Rs. 7,95,986 and directing the appellant to calculate the admissible credit year-wise and pay the interest on the excess amount within sixty days. The decision emphasized rectification and payment of interest without imposing any penalties on the appellant.

---