TaxTMI 
TaxTMI 
2010 (3) TMI 536
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....of Customs including CVD and SAD leviable under Sec. 3 of the Customs Tariff Act, 1975. These inputs are removed to job workers/ancillary units by reversing CVD and SAD paid at the time of import and availed by the assessee in their CENVAT account. During the period March 2006 to September, 2006, the appellants short reversed SAD of Rs. 2,12,40,288/- on clearances of the imported inputs to ancillary units for manufacture of PCBs. The authorities had tentatively concluded that the assessee had knowingly short paid such SAD on components. After due process of law, the Commissioner demanded an amount of Rs. 2,12,40,288/- alongwith applicable interest invoking provisions of Rule 14 of the Cenvat Credit Rules, 2004 (CCR) read with Section ....
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....t and imposition of penalty were not justified. In support of the claim that in the facts of the case, interest was not leviable, the appellants relied on the judgment of the Punjab & Haryana High Court in the case of Ind-Swift Laboratories Ltd. v. UOI [2009 (240) E.L.T. 328 (P & H)]. In the said judgment, the Hon'ble High Court had held that when the credit availed remained an entry in the CENVAT account of the assessee and was not used, the Revenue had no case to demand interest. As regards the penalty imposed, it is submitted that it was open to the assessee to follow the procedure prescribed in Rule 4(5)(a) of the CCR which provided for removing the inputs without payment of duty to a job worker and get intermediate product manufa....
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....e case of CCE v Somaiya Organo Chem. - 2007 (213) E.L.T. 130 (Tri.-Mum.) wherein the Tribunal had rejected an appeal of the department contesting an order of the Commissioner (A) holding that movement of minimal inputs to job worker without reversing credit for mixing it with ethyl alcohol to prepare denatured alcohol, eventually cleared by the appellants, was covered by the Rule 57F(3). The Tribunal had rejected the appeal filed by the revenue on the ground of revenue-neutrality. This was also the ratio of Lawkim v. CCE - 2007 (218) E.L.T. 142 (T). 3. The appellants had short paid the duty involved by inadvertence; no penalty could be imposed in the absence of deliberate defiance of law. They relied on the judgment of the apex court in ....
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....ersed the impugned credit with an intention to evade payment of appropriate duty on CTVs. Therefore, demand of duty invoking larger period would be barred by limitation. In such a case demand of interest and penalty would not be sustainable. The case laws cited by the assessee have decided similar disputes in favour of the assessee. The assessee had not utilized the credit short reversed; it did not incur liability to pay interest. 4.1 From the impugned order, we find that the demand of credit to the tune of Rs. 2,12,40,288/- has been confirmed under Rule 14 of CCR; penalty has been imposed under Rule 15(2) of CCR read with Section 11AC of the Act. Rules 14 and 15 of CCR are reproduced hereunder : "Rule 14 - Recovery of CENVAT credit ....
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....11AC of the Excise Act." 4.2 We find that the appellants had not taken or utilized cenvat credits wrongly to attract the provisions of Rules 14 or 15 of CCR invoked by the Commissioner. The appellants had not paid the SAD component of the credit availed on import of components at the time of their removal for manufacture of PCBs. We find that the show cause notice had invoked wrong provisions to recover the short paid SAD. The impugned order confirmed the proposal to demand irregular Cenvat credit taken by the assessee. The amount involved is not irregular credit nor so utilized. We find that the demand of duty of Rs. 2,12,40,288/- and penalty imposed are not in accordance with law, since the same has been ordered invoking inapplicable p....