2015 (11) TMI 774 - AT - Central Excise

Tribunal upholds extended period for Cenvat Credit demand, interest from credit entry, penalty for suppression of fact

M/s. Sandoz Pvt. Ltd. Versus Commissioner of Central Excise, Raigad

The tribunal upheld the extended period's invocation for the demand of Cenvat Credit, citing lack of disclosure before audit. The interest demand under ... Demand of interest on reversal of CENVAT Credit - Invocation of extended period of limitation - Interest u/s 11AB - Penalty u/s 11AC - Held that:- The availment of inadmissible credit was never disclosed by the appellant to the department before the audit therefore department was not in position to ascertain whether the credit taken by the appellant is correct or wrong. In view of this position it can be conveniently concluded that there is clear suppression of fact on the part of the appellant and therefore extended period was rightly invoked. Hence the demand of Cenvat credit is held to be sustained. As regard the demand of interest under Rule 14 read with Section 11AB. - simply because the case was settled by Settlement Commission interest provision will not vary, Rule 14 is applicable irrespective whether it is a case settled by Settlement Commissioner or otherwise therefore on this ground Hon’ble Apex Court judgment can not be distinguished. I therefore held that the interest is chargeable from the date of taking credit in the Cenvat account of the appellant. As regard imposition of penalty under Section 11AC, as I held above extended period is rightly invoked and demand was also rightly confirmed by invoking proviso to Section 11A(1) the provision of Section 11AC would unavoidably attract and accordingly penalty under Section 11AC is sustainable. Even as per Hon’ble Supreme Court judgment in the case of Dharamendra Textile processor[2008 (9) TMI 52 - SUPREME COURT] penalty under Section 11AC neither can be waived nor can be reduced as it is in nature of mandatory penalty. Therefore, I do not find any infirmity in the impugned order - Decided against assessee. Issues:1. Contesting the invocation of the extended period for demand of Cenvat Credit.2. Disputing the demand of interest under Section 11AB.3. Challenging the imposition of penalty under Section 11AC.Extended Period Invocation for Cenvat Credit Demand:The appeal challenged the extended period's invocation for the demand of Cenvat Credit. The appellant argued that there was no suppression of fact on their part, emphasizing their accumulated Cenvat Credit balance exceeding Rs. 4 crores, suggesting no malicious intent in availing a small amount wrongly. However, the Revenue contended that the audit revealed the wrongful credit availment, indicating suppression by the appellant. The tribunal upheld the extended period's invocation, considering the lack of disclosure before the audit, concluding that the demand of Cenvat credit was sustained.Demand of Interest under Section 11AB:Regarding the interest demand, the appellant claimed interest should only apply from the date of credit utilization, not from when it was taken in the Cenvat account. The tribunal referred to Rule 14 of the Cenvat Credit Rules, stating that interest is chargeable from the date of credit entry. The appellant tried to distinguish a Supreme Court judgment, but the tribunal held that the interest is indeed chargeable from the date of credit entry, dismissing the appellant's argument and upholding the interest demand.Imposition of Penalty under Section 11AC:The appellant contested the penalty imposition under Section 11AC, citing their belief in good faith due to the substantial accumulated Cenvat Credit balance. However, the Revenue argued that clear suppression of fact existed, justifying the penalty. The tribunal upheld the penalty, stating that the extended period invocation and demand confirmation warranted penalty imposition under Section 11AC, following the precedent that this penalty is mandatory and cannot be waived or reduced. Thus, the tribunal dismissed the appeal, affirming the imposition of the penalty under Section 11AC.