2022 (10) TMI 800

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....vices. During the conduct of audit in August 2008, it was noticed that appellant has availed wrong credit on input services used in the Co-generation plant for generation of electricity which was being wheeled out to T.N.E.B. They also availed credit on input services used for manufacture of Ethyl Alcohol. On being pointed by audit officers, the appellant paid the amount by reversing the credit on 16.08.2008. Thereafter, show cause notice dated 17.07.2012 was issued proposing to recover the wrongly availed cenvat credit along with interest and also for imposing penalty under Section 11AC of the Central Excise Act, 1944. After due process of law, the original authority confirmed the demand along with interest and appropriated the amount that....

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....eported in 2009 (240) ELT 641 (S.C) the issue was settled that when electricity generated by co-generation plant is sold outside, the credit is not eligible. Ld. Counsel argued that as the issue was interpretational in nature and also because the appellant had availed credit on the bonafide belief that it was eligible during the relevant period, the allegation that appellant suppressed the facts with intention to evade payment of duty is without any basis. 2.2 Ld. Counsel submitted that the department has collected details with regard to the wrongly availed credit from the E.R1 returns filed by the appellants. In the returns, the appellant had correctly reflected the credit taken on input services. The show cause notice is thereafter iss....

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.... period cannot be invoked. He prayed that appeal may be allowed by setting aside the penalty. 5. Ld. A.R Shri S. Balakumar appeared and argued for the Department. He supported the findings in the impugned order. Ld. A.R stressed that appellant has accepted the liability and paid up the amount as demanded in the show cause notice. The contest in the present appeal is only with regard to penalty and as they have already paid up the liability, the grounds for setting aside the penalty cannot be entertained. 6. Ld. A.R pointed out the discussions made by Commissioner (Appeals) in page-5 of the impugned order to argue that by merely stating the input credit was disclosed in the E.R1 returns it cannot be said that there is no suppression of....

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....g that credit is eligible only when electricity is used for manufacture of final products. Taking note of this aspect into consideration that there were conflicting views as to whether credit is eligible on input services used for generation of electricity that is sold outside, I am of the view, the appellant cannot be burdened with the guilt of suppression of facts with intent to evade payment of duty. The issue being interpretational in nature and as the department had collected all the details of availment of credit from the accounts maintained by the appellant, the penalty imposed in this regard is unwarranted. I hold that penalty imposed with regard to duty liability of the input tax credit availed in respect of electricity (Co-generat....