2015 (7) TMI 582 - AT - Central Excise

Tribunal: Disallowance of CENVAT Credit Upheld, Penalty Reduced, Clerical Errors Exempt from Section 11AC

The Tribunal upheld the disallowance of CENVAT Credit with interest, reduced the penalty on the Appellant, and set aside penalties on other individuals. ... Denial of CENVAT Credit - CENVAT Credit on the basis of the xerox copies of invoices and bills of Entry - held that:- Excess availment of credit was made with intention to evade payment of duty. The case law in the case of Pratam Fab Processors pvt. Ltd (2013 (9) TMI 502 - CESTAT MUMBAI) as relied upon by the learned Authorised Representative would not be applicable in this case. In that case, two Show Cause Notices were issued to the Appellant for excess availment of credit. It is seen that there was an intention on the part of the Appellant to evade payment of tax. So, in the present case, imposition of penalty under Section 11AC of the Act, would not be warranted. The nature of availment of excess credit as revealed from the statement of Smt. Beena Thomas, that in some cases, they have availed the credit on the assessable value to the extent of ₹ 1.04 Crores. The Appellant had taken credit twice on the same invoice. Taking into account of the conduct of the Appellant for excess availment of credit for more than ₹ 1 Crores, we find that it is a fit case to impose penalty under Rule 15(1) of CENVAT Credit Rules. 2004. Regarding the penalty imposed on other Appellants, we find that they are the employees of the Appellant Company. There is no evidence of direct involvement of the Appellant for excess availment of credit deliberately. Hence, in our view, the imposition of penalties on other Appellants are not warranted. - disallowance of CENVAT credit along with interest is upheld - However, penalty is reduced - Decided partly in favour of assessee. Issues:1. Excess CENVAT Credit availed by the Appellant.2. Denial of CENVAT Credit and imposition of interest.3. Imposition of penalties on the Appellant and other individuals.Analysis:Issue 1: Excess CENVAT Credit availed by the AppellantThe case involved M/s Heranba Industries Ltd. availing excess CENVAT Credit, leading to a demand of Rs. 1,27,73,273.00. The Appellant had reversed a portion of the credit and paid a significant amount before the Show Cause Notice was issued. The Tribunal found that the Appellant had not produced original documents despite a remand order, justifying the demand for the balance amount of Rs. 13,71,459.00. The Appellant's argument of no suppression of facts was countered by the lack of original document submission, leading to the Tribunal upholding the demand.Issue 2: Denial of CENVAT Credit and imposition of interestRegarding the denial of CENVAT Credit and imposition of interest, the Appellant argued that they had utilized the credit and paid interest accordingly. However, the Tribunal noted that the Appellant's minimum balance in the CENVAT Credit account was Rs. 5,09,640.00, indicating credit utilization. The Tribunal found the demand for interest justified as the Appellant had utilized the credit, distinguishing the case from precedents where credit was not utilized.Issue 3: Imposition of penalties on the Appellant and other individualsThe Tribunal analyzed the imposition of penalties under Section 11AC of the Central Excise Act, 1944. While the Appellant had paid the denied CENVAT Credit before the Show Cause Notice, the Tribunal observed that the excess credit was due to clerical errors and heavy workload, not intentional evasion. The penalty under Section 11AC was not deemed warranted as there was no intent to evade tax. Instead, a penalty under Rule 15(1) of CENVAT Credit Rules, 2004, was imposed for the excess availment of credit. Penalties on other individuals were set aside due to lack of evidence of deliberate involvement in the excess credit availing.In conclusion, the Tribunal upheld the disallowance of CENVAT Credit with interest, reduced the penalty on the Appellant, and set aside penalties on other individuals. The judgment provided detailed reasoning for each issue, considering factual verification, intent to evade tax, and individual involvement in the excess credit availment.