Tribunal Upholds Penalty for Wrong Credit Availment: Gross Negligence & Intentional Misconduct

The Tribunal upheld the impugned order, dismissing the appeal and confirming the penalty under Section 11AC for the appellant's repeated wrong availment of credit on 42 invoices, indicating gross negligence and malafide intention. Despite the appellant's payment and interest before the show cause notice, the Tribunal found the actions demonstrated intentional misconduct, leading to the appellant's liability for the penalty. The adjudicating authority's findings of excess Cenvat credit and acknowledgment of mistake supported the decision. The judgment was rendered on 24/11/2017.

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Issues involved:
Whether the appellant is liable for penalty under section 11AC for wrong availment of credit due to taking credit on value or wrong amount in respect of 42 invoices.

Analysis:
The appellant admitted to the wrong availment of credit due to inadvertent mistake and paid the entire amount along with interest before the show cause notice was issued. The appellant argued that as per Section 11A(1)(b)(ii) of the Central Excise Act, a show cause notice was not warranted in this case. The Revenue, represented by the Superintendent (A.R.), reiterated the findings of the impugned order.

The main issue to be decided was whether the penalty under Section 11AC was justified in this case. It was noted that the appellant had availed wrong credit for 42 invoices, either on value instead of duty or by showing wrong duty figures as credit in their Cenvat account. The Tribunal opined that such mistakes are expected for one or two invoices, but occurring in 42 invoices indicated gross negligence on the part of the appellant, suggesting malafide intention. The Tribunal held that making payment along with interest before the show cause notice did not absolve the appellant from penalty. The adjudicating authority found that the appellant had availed excess Cenvat credit based on an audit objection and had reversed the amount, indicating acknowledgment of the mistake.

The Tribunal observed that the repeated mistakes in taking wrong credit demonstrated a malafide intention to avail such credit. It was concluded that the department was not aware of the wrong availment initially, but the appellant's actions indicated intentional misconduct. Therefore, the impugned order was upheld, and the appeal was dismissed. The judgment was pronounced on 24/11/2017.

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