2018 (10) TMI 1535 - AT - Central Excise

Appellate Tribunal Overturns Penalty for Improper CENVAT Credit

M/s. Wipro Kawasaki Precision Machinery Private Limited Versus Commissioner of Central Tax Commissioner Of Central Tax, Bengaluru West

The appeal was allowed by the Appellate Tribunal CESTAT Bangalore on 22/10/2018. The penalty imposed on the appellant for irregularly availing CENVAT ... Penalty u/r 15(2) of CENVAT Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944 - CENVAT credit on Customs Education Cess and Customs Secondary Education Cess - reversal with interest on being pointed out - Held that:- The department has not been able to bring any material on record to show that the appellant has a mala fide intention to take the CENVAT credit wrongly - The department vide its Board Circular No.137/46/2015-ST dated 18.8.2015 wherein also the Board has clarified that in cases not involving fraud, suppression of facts, etc., if the assessee pays the tax along with interest either within 30 days from the date of issuance of show-cause notice or before the issue of show-cause notice, then in such cases, proceedings shall be deemed to be concluded. Penalty not imposable - appeal allowed - decided in favor of appellant. Issues:Appeal against rejection of CENVAT credit on Customs Education Cess and Customs Secondary & Higher Education Cess.Analysis:The appeal was directed against the order rejecting the appellant's appeal regarding the availed CENVAT credit on Customs Education Cess and Customs Secondary & Higher Education Cess. The appellant, engaged in manufacturing excisable goods, had taken Central Excise Registration and availed CENVAT credit on these items. However, it was found during verification that the credit availed on these items was ineligible as per CENVAT Credit Rules, 2004. The appellant reversed the credit along with interest upon discovery. A show-cause notice was issued demanding the irregularly availed credit, interest, and proposed penalty. The adjudicating authority confirmed the demand and imposed a penalty equivalent to the wrong credit availed under relevant rules. The appeal before the Commissioner (A) was rejected, leading to the present appeal.The appellant argued that the impugned order was contrary to facts and law, stating that the credit was availed inadvertently and immediately reversed upon notification by the Department. They claimed no mala fide intention and lack of awareness regarding the exemption Notifications. The appellant relied on various decisions to support their case. The Revenue reiterated the findings in the impugned order.After considering both parties' submissions and the material on record, the Judicial Member found that the appellant had promptly reversed the credit upon notification by the Department, as they were not aware of the exemption Notifications. It was noted that the Department failed to establish any mala fide intention on the appellant's part. Referring to a Board Circular, it was highlighted that in cases not involving fraud, if the tax is paid along with interest within a specified time, proceedings are deemed concluded. Relying on the decisions cited by the appellant and the Board Circular, the penalty imposed on the appellant was deemed unsustainable in law. Consequently, the penalty was set aside, and the appeal of the appellant was allowed with consequential relief, if any.The judgment was pronounced in open court on 22/10/2018 by Mr. S.S Garg, Judicial Member of the Appellate Tribunal CESTAT Bangalore.