Bona fide clerical error in excess Cenvat credit can defeat penalty when the credit is reversed with interest.

Penalty for excess Cenvat credit was held unsustainable where the over-availment arose from bona fide clerical error, was supported by corresponding short-credit entries in the same period, and the wrongly taken credit was reversed with interest. The Tribunal treated the discrepancy as inadvertent rather than deliberate and found no basis for penal consequences in the absence of evidence of wrongful intent. The demand for Cenvat credit and interest was, however, confirmed, leaving only the penalty aside.

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Issues: Whether penalty was sustainable for excess availment of Cenvat credit when the wrong credit arose from clerical errors and was reversed with interest.

Analysis: The appellant had availed and maintained Cenvat credit under the Cenvat Credit Rules, 2004 during the relevant period, and the excess credit was found in the course of audit. The Tribunal noted that the discrepancy occurred along with short-credit instances in the same period, supporting the explanation that the error was bona fide and clerical rather than deliberate. It also took note that the wrongly availed credit was paid back with interest. In these circumstances, and in light of the cited decisions on penalty in similar situations, the Tribunal held that the case did not warrant penal consequences.

Conclusion: Penalty was set aside, while the demand for Cenvat credit and interest was confirmed.

Final Conclusion: The appellant succeeded only on the question of penalty, but remained liable for the credit demand and interest.

Ratio Decidendi: Penalty is not justified where excess Cenvat credit results from bona fide clerical error and is reversed with interest, absent evidence of deliberate wrongful availment.

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