2017 (6) TMI 154 - AT - Central Excise

Tribunal overturns order, imposes nominal penalty, aligns with legal principles.

The Tribunal allowed the appeal, setting aside the impugned order. A nominal penalty of Rs. 5,000 was imposed under Rule 15 of CCR, 2004, absolving the ... CENVAT credit - inputs procured from 100% EOU - credit availed in excess of the amount actually eligible - Held that: - the impugned order is not sustainable in law as the same has been passed based on the original assessable value indicated in the said two invoices No.141 dated 18.7.2007 and Invoice No.197 dated 23.8.2007 and not taking into account the revised assessable value - also, it was found that subsequently during December 2007, a certificate was received from the supplier M/s. Mahima Life Sciences Pvt. Ltd., a 100% EOU and it was duly certified by the jurisdictional Superintendent in-charge of the 100% EOU on 18.12.2007. The appellants have only availed CENVAT credit but have not utilized the same as there was sufficient balance lying in the CENVAT credit during the relevant period and therefore, the appellants are not liable to pay interest and penalty. Since there was some procedural violation committed by the appellant, therefore a nominal penalty of ₹ 5,000/- is imposed under 15 of CCR, 2004 on the appellant - appeal allowed - decided in favor of appellant. Issues:- Appeal against rejection of CENVAT credit benefit- Determination of eligibility of CENVAT credit- Consideration of revised assessable value- Compliance with Rule 9 of CCR- Liability for interest and penaltyAnalysis:1. Appeal against rejection of CENVAT credit benefit:The appeal was filed challenging the rejection of CENVAT credit benefit by the Commissioner (A) in an order dated 23.3.2009. The appellant, a manufacturer of P & P Medicaments, availed CENVAT credit under the CENVAT Credit Rules, 2004. The internal audit revealed excess credit availed from an EOU supplier, leading to a show-cause notice for recovery of irregular credit, interest, and penalty. The adjudicating authority determined excess credit availed and imposed penalties, which were upheld by the Commissioner (A), prompting the present appeal.2. Determination of eligibility of CENVAT credit:The appellant contended that the impugned order failed to appreciate evidence and contradicted judicial precedents. The argument centered on the computation of credit based on the original assessable value, ignoring revised values. The appellant claimed that the differential duty payment was confirmed by the EOU supplier, justifying credit availed. The appellant cited Gujarat High Court's decision and other cases to support their position on eligibility criteria.3. Consideration of revised assessable value:The Tribunal observed that the impugned order erred by not considering the revised assessable value indicated in the invoices. A certificate received in December 2007 from the EOU supplier, duly certified, validated the differential duty payment. As the credit remained unutilized due to a sufficient balance in the CENVAT account, interest and penalty were deemed inapplicable, following precedents like Bill Forge and Reid and Taylor.4. Compliance with Rule 9 of CCR:The learned AR argued Rule 9 violation by the appellant, claiming credit was taken prematurely. However, the Tribunal found the appellant's actions compliant with the rules, given the subsequent certification and unutilized credit balance.5. Liability for interest and penalty:Based on the findings and precedents, the Tribunal allowed the appeal, setting aside the impugned order. While acknowledging procedural violations, a nominal penalty of Rs. 5,000 was imposed under Rule 15 of CCR, 2004. The decision absolved the appellant from interest and penalty liabilities, aligning with the principles established in relevant case laws.In conclusion, the Tribunal's judgment favored the appellant, emphasizing the correct application of CENVAT credit rules, consideration of revised assessable values, and adherence to legal precedents in determining eligibility and penalty imposition.