Tribunal overturns penalty for erroneous cenvat credit claim, citing clerical error, not evasion.

The Tribunal set aside the penalty imposed under Section 11AC of the Central Excise Act on the appellant for wrongfully availing cenvat credit on capital goods. The Tribunal found that the excess credit was due to a clerical error, not an attempt to evade duty payment. As there was no willful misstatement or suppression of facts, the penalty was deemed unsustainable, leading to the appellant's appeal being allowed.

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Issues:
1. Wrong availment of cenvat credit on capital goods.
2. Rejection of appeal by Commissioner (Appeals).
3. Imposition of penalty under Section 11AC of the Central Excise Act.
4. Appellant's submission of clerical error and reversal of excess credit.
5. Applicability of penalty under Section 11AC.

Analysis:

1. The appeal was filed against the Commissioner (Appeals) order that rejected the appellant's appeal regarding the wrongful availment of cenvat credit on capital goods. The appellant, engaged in manufacturing 'MS Billets,' had availed cenvat credit twice on the same document, which was irregular as per the Cenvat Credit Rules, 2004.

2. The adjudicating authority confirmed the duty demand, interest, and penalty on the appellant for wrongly availing and utilizing the cenvat credit. The Commissioner upheld this order, leading to the appeal. The appellant argued that the impugned order did not properly appreciate the facts and the law.

3. The appellant contended that the penalty imposed under Section 11AC of the Central Excise Act was not justified as there was no intention to evade payment of duty. The appellant acknowledged the clerical error that led to the excess cenvat credit and reversed it along with interest but did not pay the penalty, citing lack of suppression of material facts.

4. The appellant, being a new factory with inexperienced staff, had mistakenly availed excess credit, which was promptly rectified upon audit findings. The appellant argued that the penalty under Section 11AC was unwarranted as there was no willful misstatement or intention to evade duty payment.

5. The Tribunal found merit in the appellant's arguments, noting that the excess credit was due to a bona fide clerical error and not an attempt to evade duty payment. As there was no suppression or willful misstatement, the imposition of an equal penalty under Section 11AC was deemed unsustainable in law, leading to the setting aside of the penalty and allowing the appeal of the appellant.

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