Suppression of facts was not made out where unutilised Cenvat credit was reversed before notice and no intent to evade was shown.

Penalty could not be sustained where Cenvat credit, though wrongly availed, was not utilised and had been reversed before the show cause notice. In the absence of cogent evidence of fraud, misrepresentation, or any positive act showing intent to evade duty, invocation of suppression of facts was not justified. Mere reference to the clarity of the rules was insufficient to establish the penal foundation, particularly since the duty liability had otherwise been regularly discharged. The assessee therefore succeeded on the penalty issue.

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Issues: Whether penalty and the invocation of suppression of facts could be sustained where Cenvat credit, though wrongly availed, had not been utilised and was reversed before the show cause notice.

Analysis: The unutilised credit had already been reversed before issuance of the show cause notice, and the duty liability was otherwise regularly discharged. In the absence of utilisation of the credit and in the absence of any cogent evidence of fraud, misrepresentation or a positive act showing intent to evade duty, mere reference to the clarity of the rules was insufficient to justify suppression or the penal consequence. The foundation for penalty was therefore not made out.

Conclusion: Penalty could not be sustained, and the assessee succeeded on this issue.

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