Penalty for wrong Cenvat credit reversal set aside where interest was paid and no intent to evade tax was shown.

Wrong Cenvat credit reversed with interest did not justify equal penalty where the record showed no suppression of facts or intent to evade tax. The assessee's status as a Government of India undertaking was treated as relevant to the assessment of mala fide intent, and the cited precedents on statutory government bodies were applied. On that basis, penalty under Section 78 of the Finance Act, 1994 was held unsustainable and was set aside.

---

---

Issues: Whether penalty under Section 78 of the Finance Act, 1994 was sustainable where the wrong Cenvat credit had been reversed with interest and the appellant was a Government of India undertaking.

Analysis: The disputed credit had already been reversed along with interest, and the appeal survived only on the question of equal penalty. The material on record did not show suppression of facts with intent to evade tax. The appellant being a Government of India undertaking, mala fide intention could not be presumed, and the cited precedents on statutory government bodies were treated as applicable.

Conclusion: The penalty under Section 78 of the Finance Act, 1994 was held to be unsustainable and was set aside in favour of the assessee.

---