Appeal allowed for Cenvat credit disallowance due to alleged facts suppression. No intent to evade duty found.

The appeal was allowed against an Order-in-Original disallowing Cenvat credit of Rs. 9,25,387 due to alleged suppression of facts by the appellant's unit. The court found no intent to evade duty, emphasizing revenue neutrality in a stock transfer within the same company. The Settlement Commission's lenient penalty imposition of Rs. 1.5 lakhs indicated no malicious intent, leading to the appeal being allowed based on the lack of grounds to deny Cenvat credit.

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Issues:
- Disallowance of Cenvat credit
- Allegations of suppression of facts
- Revenue neutrality and intent to evade payment of duty
- Settlement commission's decision and penalty imposition

Disallowance of Cenvat credit:
The appeal was against an Order-in-Appeal where the Revenue's appeal was allowed against an Order-in-Original which dropped the disallowance of Cenvat credit amounting to Rs. 9,25,387. The dispute arose from the availing of credit based on supplementary invoices issued by the appellant's Hinjewadi Unit. The Revenue alleged suppression of facts due to duty payment only after a departmental officer pointed out the short payment, citing Rule 9(1)(b) of Central Excise Rules, 2004.

Allegations of suppression of facts:
The appellant's counsel argued that there was no suppression of facts as the short payment was a result of improper calculation by the Hinjewadi Unit, which rectified the error by paying the amount and issuing a supplementary invoice. It was emphasized that the transaction was a stock transfer within the same company, ensuring revenue neutrality. The counsel cited various judgments to support the argument that intent to evade payment of duty cannot be alleged in cases of revenue neutrality.

Revenue neutrality and intent to evade payment of duty:
The Member (Judicial) analyzed the case and concluded that the appellant's Hinjewadi Unit did not engage in clandestine removal to evade duty. The unit paid the duty based on its own costing method, later rectifying the error as per the department's contention. The judgment highlighted that the duty paid by the unit was available as Cenvat credit to the appellant, establishing revenue neutrality and negating any intention to evade excise duty.

Settlement commission's decision and penalty imposition:
Regarding the settlement commission's involvement, it was noted that the Hinjewadi Unit settled a case involving a total duty of Rs. 75.62 lakhs, with a token penalty of Rs. 1.5 lakhs imposed. This lenient penalty imposition indicated no malicious intent to evade duty payment. The Member (Judicial) disagreed with the lower authority's contention that the settlement commission's penalty imposition implied suppression of facts, as the commission did not explicitly find any suppression. Consequently, the impugned order was set aside, and the appeal was allowed based on the lack of grounds to deny Cenvat credit to the appellant.

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