Tribunal upholds penalty for wrongly availed credit under Cenvat Credit Rules

The Tribunal dismissed the ROM application, upholding the penalty imposed on the applicant under Rule 15(2) of the Cenvat Credit Rules, 2004, for wrongly availed credit. Despite the absence of allegations of mis-declaration or fraud, the Tribunal found sufficient evidence of inadmissible credit taken by the applicant, justifying the penalty. The Tribunal emphasized the repeated instances of wrongly availed credit as clear evidence against the applicant, leading to the conclusion that the penalty was warranted.

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Issues: Liability of interest on wrongly availed credit, applicability of Rule 15 (2) of Cenvat Credit Rules, 2004, interpretation of judicial precedents

In this case, the applicant filed a ROM application against an order imposing penalty under Section 15 (2) of the Cenvat Credit Rules, 2004, for wrongly availed credit. The applicant argued that evidence showing non-utilization of credit was submitted promptly after the hearing, and no allegations of mis-declaration or fraud were made in the notice. The AR, however, contended that interest is payable even if credit is not utilized, citing judicial precedents. The Tribunal analyzed the submissions, noting the distinction made by the High Court in a previous case and the applicability of Rule 15 (2). The Tribunal observed that even without specific allegations of mis-declaration, the evidence of inadmissible credit taken by the applicant justified the penalty. The Tribunal dismissed the ROM application, emphasizing the repeated instances of wrongly availed credit as clear evidence against the applicant, leading to the conclusion that the penalty was justified. The Tribunal's decision was pronounced on 28/12/2017.

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