TaxTMI 
TaxTMI 
TaxTMI 
2017 (1) TMI 1852
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....as provided under Rule 9 of the CENVAT Credit Rules, 2002. The respondent thus reversed Rs. 3500/- being the CENVAT credit balance as on 1.03.2003 reflected as per their RT-12 returns. It is the case of department, that on information that the respondent has not reversed/paid the entire amount of the CENVAT credit as provided in Rule 9, the Anti-Evasion Wing conducted a search in respondent's premises on 11.09.2003. The officers of Central Excise recovered documents/records and also seized certain goods. Statements of the manager of the respondent and others were recorded. On the day of visit of the officers there was huge stock of inputs lying in the yard and the shop floor. Event though there was huge balance of inputs there was no way to know the exact balance of quantity of inputs as per the records maintained by the appellant. Thus without physical stock taking the exact balance quantity of inputs could not be ascertained. However, physical stock taking was opted out by offices as the stock was huge and due to lack of facilities for weighment and because stock taking of length, thickness and diameter wise was necessary. Shri. A. V. Prasad Rao, manager of the respondent sta....
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....lty under section 11AC of the Central Excise Act, 1944 and / or penalty under Rule 25 of the Central Excise Rules, 2002 should not be imposed, iii) Interest under Section 11AB of the Act should not be recovered; and iv) The goods seized should not be confiscated under Rule 25 of the Central Excise Rules, 2002. 4. After due process of law, the original authority confirmed the demand of duty amounting to Rs. 13,51,828/- being the CENVAT credit which ought to have been reversed by the appellant along with interest thereon and imposed equal amount of penalty under Section 11AC of Central Excise Act, 1944 read with Rule 25 of Central Excise Rules, 2002 Meanwhile, the assessee vide letter dated 23.09.2003 had requested for provisional release of goods valued Rs. 20 lakh. Thus goods valued at Rs. 19,92,136/- was released provisionally on payment of duty of Rs. 3,18,742/- along with amount of Rs. 41,689/- being interest from 01.04.2003 to 17.03.2004. The original authority ordered confiscation of seized goods under Rule 25 valued at Rs. 19,92,136/- giving an option to pay redemption fine of Rs. 19,92,136 in lieu of the confiscation. 5. Against this order the assessee filed an appeal ....
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....erly returns to the department on 17.07.2003 with necessary information and that the officers had a chance to call for the details to verify the correctness and take remedial action. That to merely state that the assessee did not maintain the records so as to reflect the actual credit does not prove suppression or intention to evade payment of duty is highly misplaced by the Commissioner (Appeals). He pointed out that the maintenance of records by the assesse was in such a way that the closing balance of credit on inputs did not reflect the actual credit on inputs. He contended that asseessee had manipulated their records in such a way that the balance can be arrived only by physical stock taking In the returns the assessee had not disclosed the vital information of the stock of credit-availed inputs. While scrutinising the return filed by the assessee, the Range Superintendent who scrutinized the return subsequent to the booking of the case by Anti-Evasion Wing made the specific remarks that "the assessee has reversed the input credit of Rs. 3,523/- and capital goods credit of Rs. 191/- lying in balance, while opting for Notification No.8/2003-CE dated 01.03.2003. The assesses has....
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....see and taken remedial action, there is no suppression. That merely because the scrutiny of returns were done later, it cannot be a reason to hold that assessee is not guilty of suppression. He therefore, contended that the equal amount of penalty under Section 11AC has to be imposed and the redemption fine imposed by the original authority has to be maintained. 9. On behalf of the respondent, the Ld. Counsel S. Vittal Shetty argued in detail explaining the facts and cited a number of decisions. The assessee has also filed cross objections. The main arguments put forward by the Ld. Counsel on behalf of the respondent/assessee can be summarized as under: i) That the assessee was under the mistaken belief that reversal of the credit available in CENVAT register would suffice for complying the provision in Rule 9 of CCR, 2002 Accordingly they had reversed Rs. 3500/- which was the closing balance as per the CENVAT register. ii) That the assessee has not suppressed facts. The credit availed was properly recorded in the register and the same was disclosed in the monthly returns. The details of the returns filed by assessee for the past one year would show that assessee had been maint....
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....led by them. In order to appreciate the basis of this conclusion arrived by the Commissioner (Appeals) to hold that the penalty under Section 11AC cannot be imposed the relevant paragraph in the impugned order is reproduced as under: On the face of it, the issue to be considered is whether penalty is leviable under Section 11AC and whether the goods are confiscable. The adjudicating authority holds the view that the appellant is required to be penalized and the goods to be confiscated whereas the appellant urges consideration otherwise. The issue of penal action under Section 11AC would emanate from. "Where any duly of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reasons of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of this Act or of the rules intent made thereunder with intent to evade payment of duly "which would be derived from accusation made under the proviso to Section 11(A) (1) of the Act. Therefore, the primary task is to determine whether the proviso is liable to be invoked and whether the act other appellant would qualify for invocation of the same....
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....or home consumption or for export. Thus non maintenance of inputs stock as such is not a criterion here as the actual credit required to be reversed can be worked out in accordance with the quantity in process or in the final products lying in stock as on date of option as the whole lot of the inputs have been transferred to the shop floor for use in manufacture. Thus the allegation of maintenance of stocks with an intention to suppress the existence of the closing stock as alleged in the Show Cause Notice does not merit consideration for invocation of the proviso to Section 11A(1). Hence the penalty imposable under Section 11AC also does not arise. 12. The main contention on the part of the respondent is that they were under the impression that reversal of credit lying in balance as reflected in the CENVAT register is sufficient, and they were not aware that the credit in respect of stock of credit-availed inputs, which are in process and contained in final products on the date when such option is exercised has to be reversed The department alleges that the records were intelligently manipulated to conceal the stock of credit availed inputs. However, they do not allege any discr....
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....turns which disclosed the reversal of credit and called for details from the respondent. That the mistake ought to have been pointed out to the respondent even before search and show cause notice as the mistake is only a remedial mistake. In spite of the search conducted in the premises and verification of records done by the Anti-Evasion Wing of the Department, no case has been alleged against the respondent that the respondent availed wrong credit or that the respondent availed irregular credit with intent to evade payment of duty. This can only point to the conclusion that the credit availed by the respondent and the returns filed are proper and do not contain any discrepancy. The only allegation is that the respondent ought to have reversed the amount of credit already taken in respect of inputs lying in stock, semi finished goods and finished goods. As already discussed the notification at the relevant time was a very new notification. For this reason the contentions of the respondent that they were under the impression that the closing balance of credit as per register is required to be reversed merits consideration. 13. Another ground raised by the Department is that the re....