Tribunal overturns penalties, directs reconciliation of Cenvat Credit, emphasizing absence of malafide intent

The Tribunal set aside the penalties imposed on the appellant for failing to pay the Cenvat Credit of SAD, considering the absence of malafide intent as they had already paid excess CVD. The excess CVD was to be adjusted against the short payment of SAD, with the matter remanded for reconciliation. The appellant was directed to pay any reconciled demand on account of SAD with interest, or the matter would be closed if no demand was found payable.

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Issues:
Penalties imposed under Section 11AC read with Rule 15 (2) of the Cenvat Credit Rules, 2004.

Analysis:
The appellant contested penalties imposed on them for inadvertently not paying the Cenvat Credit of SAD availed on imported goods, despite paying CVD. The Department initiated proceedings demanding duty for the Cenvat Credit availed on SAD, along with interest and penalties. The appellant argued that the failure to pay SAD was a bonafide mistake due to software issues, and they had already paid the CVD. The appellant claimed there was no malafide intention to evade payment. The Revenue, however, supported the penalties imposed.

Upon hearing both parties, the Tribunal considered whether penalties under Rule 15 (2) of the Cenvat Credit Rules, 2004 read with Section 11AC of the Act could be imposed. It was noted that the appellant had paid excess CVD at the time of clearance, indicating no malafide intentions to evade duty payment. As malafides were absent, the penalty was set aside. Additionally, the excess CVD paid was to be adjusted against the short payment of SAD, with the matter remanded to the adjudicating authority for reconciliation.

In conclusion, the Tribunal disposed of the appeal by remand, directing the appellant to pay any reconciled demand on account of SAD along with interest, or closing the matter if no demand was found payable.

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