Penalty for Disputed CENVAT Credit on Imported Steel Scraps Overturned

The appeal challenged the penalty imposed under Rule 15(2) of Cenvat Credit Rules, 2004, for disputed CENVAT credit on imported steel scraps. The Tribunal found the penalty unjustified as there was no evidence of fraudulent intent in availing the credit. The appellant had paid the amount to the Government and the reversal of credit was not due to malafide intent. Therefore, the penalty imposition was set aside, and the appeal was partly allowed in favor of the appellant.

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Issues:
1. Disputed CENVAT credit on imported steel scraps.
2. Imposition of penalty under Rule 15(2) of Cenvat Credit Rules, 2004.

Analysis:
1. The appellant, engaged in manufacturing, imported steel scraps during a disputed period and availed CENVAT credit captured in the Bill of Entry. The department disputed the credit post-01.04.2012 due to the absence of cess levy. The appellant reversed the credit and paid interest. The adjudication confirmed the demand and imposed a penalty. The appeal challenged the penalty.

2. The appellant did not contest the CENVAT credit and interest demand but argued against the penalty. The appellant claimed the credit was not availed fraudulently. The Revenue contended that the penalty was justified as the appellant reversed the credit only after an audit pointed out the error.

3. The Tribunal noted that the appellant paid the amount to the Government and there was no evidence of malafide intent in availing the credit. The penalty under Rule 15(2) was deemed unjustified without proof of fraudulent intent. The impugned order's penalty imposition was set aside, and the appeal was partly allowed in favor of the appellant.

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