Tribunal Overturns Penalty for Cenvat Credit Irregularity

The Tribunal set aside the penalty imposed under Section 11AC of the Central Excise Act, 1944, due to irregular availment of cenvat credit on inputs procured from a 100% EOU. The Tribunal ruled in favor of the appellant, citing precedents and finding no merit in the impugned order. The appellant was granted consequential reliefs as per law.

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Issues:
1. Irregular availment of cenvat credit on inputs procured from 100% EOU.
2. Quantification of eligible credit available for inputs on which duty has been paid by the EOU.
3. Penalty imposed under Section 11AC of the Central Excise Act, 1944.

Analysis:
1. The appellants were engaged in the manufacture of Turbo Chargers and parts, paying central excise duty, and availing credit on inputs per Cenvat Credit Rules, 2004. The dispute arose when Revenue alleged irregular availment of cenvat credit on inputs from 100% EOU. The original authority confirmed a credit amount and imposed penalties under Section 11AC of the Central Excise Act, 1944.

2. The appellant's counsel argued that they availed credit as per Rule 3 of Cenvat Credit Rules, 2004, with no irregularity or excess credit on inputs from 100% EOU. Citing a recent decision involving M/s.Hindustan Zinc Ltd., the counsel contended that the appellant is eligible for credit of additional duty of customs, including SAD. The Tribunal's decisions in other cases were also referenced to support the appellant's claim.

3. The Assistant Revenue reiterated the lower authorities' findings. After hearing both sides and reviewing the appeal records, the Tribunal noted that the issue had been previously resolved in favor of the appellant in a decision before the Tribunal. Accordingly, following the decisions mentioned, the Tribunal found no merit in the impugned order and set it aside, allowing the appeals with consequential reliefs as per law.

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