Cenvat credit penalty set aside where reversed credit was corrected before notice and no intent to evade was shown.

Penalty under Rule 15 of the Cenvat Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944 was held unsustainable because the wrongly availed Cenvat credit was reversed before the show-cause notice and interest was later paid. The credit related to outward GTA services, input services, non-receipt of raw material, and a small die-cost amount. As the Revenue produced no material showing intent to evade duty, the penal provision was not attracted. Penalty was therefore set aside.

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Issues: Whether penalty under Rule 15 of the Cenvat Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944 was sustainable where the wrongly availed Cenvat credit had been reversed before issuance of the show-cause notice and interest had also been paid.

Analysis: The wrongly availed credit on outward GTA services, input services, credit without receipt of raw material, and the small amount relating to die cost was reversed before the show-cause notice. Interest was subsequently paid in compliance with the Tribunal's direction. The Revenue did not produce material to show any intention to evade duty. In the absence of such intent, the penal provision was not attracted.

Conclusion: Penalty was not justified and was set aside.

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