2015 (10) TMI 1639 - AT - Central Excise

Judge upholds Cenvat credit, sets aside penalty. Lenient approach due to full payment and cooperation.

The judge upheld the Cenvat credit payment and set aside the penalty imposition, considering the appellant's cooperation and payment of the full amount ... Denial of CENVAT Credits - credit taken twice on the same documents - Held that:- When voluminous documents are handled, some mistakes do happen and since appellants have chosen to pay the entire amount of Cenvat credit including the last item the correctness of which is debatable, I consider that appellant deserves a lenient treatment as regards penalty. In view of the above, I consider since the appellant is not contesting the demand and have paid the entire amount with interest, penalty can be waived. In the normal course the demand could have been limited to the normal period in the absence of any intention to evade duty. Cenvat credit with interest voluntarily paid by the appellant stands upheld as not contested. Penalty imposed is, set aside - Decided in favour of assessee. Issues:1. Denial of Cenvat credit of Rs. 4,47,829 with interest and penalty imposition.Analysis:1. The appellant's representative argued that the first demand was due to mistakenly taking credit twice on the same documents, as two copies of bills of entry were received and credit was taken separately on both. The second demand of Rs. 8,000 resulted from a clerical error where an amount was taken in excess on the same document. The third demand of Rs. 1,55,426 arose from taking credit on the warehousing bill of entry instead of the bill of entry for home consumption. The fourth demand was due to mistakenly taking credit for service tax paid on services related to a 100% EOU located in the same compound. The last demand stemmed from importing goods that were later re-exported without usage, with the appellant reversing the credit at the time of re-export. The appellant did not dispute the demands and paid the entire amount with interest, arguing that employees handling the work did not benefit from the errors, and there was no intention to evade duty or suppress facts. The appellant requested leniency in penalty imposition.2. The respondent's representative contended that the appellant lacked systems to prevent the incorrect utilization of Cenvat credit, suggesting a stricter view on the matter.3. The judge acknowledged that errors could occur when handling voluminous documents and noted that the appellant had voluntarily paid the entire Cenvat credit amount, even disputable items. Considering the appellant's cooperation and payment, the judge deemed a lenient approach appropriate, waiving the penalty as the appellant did not contest the demand and paid the full amount with interest. The judge upheld the Cenvat credit payment and set aside the penalty imposition, disposing of the appeal accordingly.