Reversal made with interest whether penalty @ 15% is to be paid.

[samiuddin ansari]

Sir,

My friend is having one manufacturing unit. Audit team of the Central Excise department conducted audit and raised some observations related to cenvat credit availment on Inputs and utilisation thereof. On being agreed, he has made reversal of Cenvat credit availed and utilised of Inputs with interest. However, the Audit team emphasised to made reversal with interest and penalty. I would like to know as to whether he has to made reversal alongwith with interest and penalty, however, he has not suppressed the fact, but due to oversight by the accountant of the unit. The same was availed and utilised which was infact not admissible to them. I seek your valuable advise and guidance in to the matter as to whether penalty is required to be paid in such case or otherwise.

Thanks with regard,

(Samiuddin Ansari)

AI Summary

Voluntary reversal with interest can prevent penalty if notified to authorities before issuance of a recovery notice.
Reversal of wrongly availed Cenvat credit must be accompanied by payment of interest, and voluntary reversal and written intimation to the authority made before any departmental notice will generally preclude imposition of penalty; if reversal follows audit detection and is not made prior to notice, penalty is likely unless bona fides are established.