Appeal granted, penalty reduced by 50% for availing ineligible credit on duty payment.

The court allowed the appeal, overturning the decision confirming the penalty amount imposed on the appellant for availing ineligible credit against payment of Education Cess and Secondary & Higher Education Cess on counter veiling duty. The court held that the appellant's actions did not amount to suppression, willful misstatement, or fraud, as they had paid the full duty demand amount through Cess, which was no longer applicable. The court considered the appellant's mistake as a genuine error due to lack of awareness of the rule change, leading to the reduction of the penalty amount to 50%.

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Issues:
Reduction of penalty amount for availing ineligible credit against payment of Education Cess and Secondary & Higher Education Cess on counter veiling duty (CVD).

Detailed Analysis:
The appellant challenged the reduction of penalty amount to 50% from 100% of the duty amount awarded by the order-in-original for availing ineligible credit against payment of Education Cess and Secondary & Higher Education Cess on CVD. The appellant sought total waiver of the penalty amount. The appellant's contention was that they had paid Education Cess and Secondary and Higher Education Cess on CVD after 01.04.2012, which was no longer leviable from that date, and availed Cenvat credit in 2014-15. The appellant argued that the payment was auto-generated and captured in the system during the submission of bills of entry. The appellant, being a 100% export-oriented company, claimed that customs duty was leviable at a zero rate, refuting the department's allegation of intentionally availing Cenvat credit improperly.

In response to the submissions, the department fully supported the order of the Commissioner (Appeals) and reiterated the grounds of confirmation of the appeal. Upon perusing the case record, it was noted that the appellant consistently stated from the reply to the show cause that no Cenvat credit was availed by them in respect of education cess on basic custom duty since it was zero-rated. The duty demand was met in 2015 upon realizing the wrong availment of credit against payment of cess on CVD. The Show Cause Notice served in 2016 alleged suppression, but the appellant had reversed the Cenvat credit amount in 2015. The Commissioner (Appeals) reduced the penalty amount to 50% based on the transactions recorded in the Books of Accounts, considering the appellant's mistake as a bonafide error due to not knowing the change in rules.

The judgment allowed the appeal, setting aside the order passed by the Commissioner (Appeals) confirming the penalty amount. The court held that the appellant's conduct could not be construed as suppression of fact, willful misstatement, or fraud, as they had paid the entire duty demand amount by way of Cess, which was no longer leviable. Despite relying on various legal precedents, the court found no necessity to invoke an extended period or impose a fiscal penalty on the appellant.

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