Revenue-neutral credit error treated as a procedural defect, leaving the demand and penalty set aside.

Taking Cenvat credit in PLA instead of the Cenvat credit account was treated as a minor procedural defect because the assessee had paid duty on the diverted inputs and was otherwise eligible for the credit. The Court held the matter to be revenue neutral, so no substantial question of law arose for interference in the tax appeal. The Tribunal's order setting aside the duty demand and penalty was upheld.

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Issues: Whether the Tribunal was right in treating the assessee's taking of credit in PLA instead of the Cenvat credit account as a minor procedural mistake and in setting aside the duty demand and penalty.

Analysis: The assessee had paid duty on the diverted inputs and was otherwise eligible for credit on the duty so paid. The only mistake was the mode of taking credit, namely, in PLA instead of the Cenvat credit account. The Court accepted the Tribunal's view that this was merely a procedural defect and that the matter was revenue neutral. In such circumstances, no substantial question of law arose for interference in the tax appeal.

Conclusion: The issue was decided against the Revenue and in favour of the assessee; the Tribunal's order setting aside the demand and penalty was upheld.

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