2017 (11) TMI 408 - AT - Central Excise

Tribunal allows appeal on CENVAT credit eligibility for metal scrap dealer.

City Steel Versus Commissioner of Central Excise and Service Tax

The Tribunal allowed the appeal of a metal scrap dealer regarding eligibility for CENVAT credit on Bill of Entry No.27/2009. The Tribunal ruled in favor ... Penalty u/s 11AC read with Rule 25 - the Commissioner(Appeals) in one Order-in-Appeal has partially allowed and held that the appellant is eligible for CENVAT credit availed on Bill of Entry No.27/2009 dt. 21/01/2009 whereas in another impugned order dt. 25/11/2013, he rejected the appeal of the appellant - Held that: - there is no suppression on the part of the appellant. In fact, the appellant himself voluntarily gave intimation to the Range Officer regarding the purchase of the vessel vide letter dt. 18/03/2009 on which the Department has started the enquiry and thereafter issued SCN. Thereafter the appellant paid the duty of ₹ 1,37,295/- on 22/01/2011 and paid ₹ 1,65,464/- from CENVAT credit - non-payment of duty, non-obtaining of Central Excise registration, not following Central Excise registration procedures etc. cannot be considered as fraud, collusion or suppression of facts unless there is a conscious or deliberate withholding the information on the part of the assessee - penalty u/s 11AC read with Rule 25 set aside. The second impugned order dt. 25/11/2013 passed by the Commissioner(Appeals) is not sustainable in law as the earlier Commissioner(Appeals) has already allowed the CENVAT credit of ₹ 14,74,189/- on the Bill of Entry dt. 27/01/2009 and there was no need to issue the fresh SCN and denial of CENVAT credit. Appeal allowed - decided in favor of appellant. Issues:1. Eligibility for CENVAT credit on Bill of Entry No.27/2009.2. Imposition of penalty under Section 11AC read with Rule 25.3. Disallowance of CENVAT credit of &8377; 14,74,189/- under Bill of Entry No.27/2009.Issue 1: Eligibility for CENVAT credit on Bill of Entry No.27/2009The appellant, a metal scrap dealer, purchased a sunken ship and obtained scrap by breaking the ship without separate registration for breaking activities. The Assistant Commissioner alleged suppression and demanded duty under Section 11A(1) of the Central Excise Act. The Commissioner(Appeals) partially allowed the appeal, allowing CENVAT credit under the Bill of Entry but upheld the penalty under Section 11AC. The appellant argued lack of intent to evade duty, citing voluntary disclosure and reliance on past decisions. The Tribunal found no suppression, noting the appellant's cooperation and payment of duty upon notification. Referring to precedent, the Tribunal ruled non-payment or procedural lapses do not imply fraud. Consequently, the penalty was set aside, and the appeal allowed.Issue 2: Imposition of penalty under Section 11AC read with Rule 25The Commissioner(Appeals) imposed a penalty under Section 11AC on the appellant, alleging suppression. The Tribunal disagreed, noting the appellant's proactive disclosure and subsequent duty payment upon notification. Citing legal precedents, the Tribunal clarified that mere negligence or failure does not establish fraud or intent to evade duty. As there was no deliberate withholding of information, the penalty was deemed unsustainable, and the appeal was allowed.Issue 3: Disallowance of CENVAT credit of &8377; 14,74,189/- under Bill of Entry No.27/2009The Additional Commissioner disallowed CENVAT credit under the Bill of Entry, despite the Commissioner(Appeals) previously allowing it. The Tribunal found the subsequent denial unwarranted, as the earlier decision had not been challenged by the Revenue. Referring to legal principles, the Tribunal held that there was no basis for the subsequent Commissioner(Appeals) to review the earlier decision. Consequently, the disallowance was deemed unsustainable, and both appeals were allowed, setting aside the impugned orders with any consequential reliefs.