TaxTMI 
TaxTMI 
2025 (11) TMI 1694
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....tion 11A(1) and 11AA of the Central Excise Act, 19444. [the Central Excise Act] However, as the amount of CENVAT credit relating to electricity sold to M/s. Ajmer Vidyut Vitran Nigam Limited [the State Electricity Board] had already been reversed by the appellant, the same was appropriated. The Commissioner also imposed penalty upon the appellant under rule 15(1) of the 2004 Credit Rules and ordered it to be recovered from the appellant. In respect of the seventh show cause notice dated 12.04.2018, the Commissioner dropped the demand as electricity was wheeled out to the sister concerns of the appellant. 2. The appellant has, therefore, filed these six appeals to assail that part of the order dated 26.06.2024 passed by the Commissioner that adjudicates six show cause notices. 3. The appellant is engaged in the manufacture of Zinc Ingots and Leads falling under Chapters 78 and 79, respectively, of the First Schedule to Central Excise Tariff Act, 1985. The appellant claims to have availed CENVAT credit of duty paid on inputs, capital goods and input services in terms of the provisions of the 2004 Credit Rules. 4. During the course of audit of records of the appellant, it was....
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.... 3,42,95,329 26,00,966 50298/2025 4 28.4.2014 1,84,19,172 10,41,849 50300/2025 5 22.7.2016 July 2015 to March 2016 2,47,96,928 18,78,650 50299/2025 6 22.7.2016 2,00,45,565 6,30,230 50303/2025 7 12.4.2018 April 2016 to June 2017 2,73,15,687 4,40,54,353 --- TOTAL CREDIT 8,18,68,199 11,04,92,225 1,06,25,690 7. It needs to be noted that the show cause notice dated 12.04.2018 at Serial No. 7 in the above table for the period from April, 2016 to June, 2017 was issued only proposing to demand and recover CENVAT credit attributable to inputs and input services used in the generation of power which was transferred to the sister concerns. The rest of the six show cause notices were issued proposing recovery of CENVAT credit on inputs and input services attributable to that portion of electricity transferred to the sister concerns as well as sold to the State Electricity Board. 8. The appellant filed replies to the show cause notices and denied the allegations. 9. The Commissioner adjudicated all the aforesaid seven show cause notices by a ....
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.... as is clear from the show cause notices and the impugned order as they appropriate such reversed amount. It is settled law that once the appellant has reversed CENVAT credit availed on inputs and input services, it would tantamount to not taking of credit at all. Thus, no penalty could have been imposed. To support this contention, learned counsel placed reliance on the judgment of the Supreme Court in Chandrapur Magnets Pvt. Ltd. vs. Collector of C. Excise, Nagpur [1996 (81) ELT 3 (SC)]; and (iii) The appellant was under a bonafide belief that CENVAT credit availed by it and reversed by it was in accordance with the relevant pronouncements. Hence, penalty is not imposable under rule 15(1) of the 2004 Credit Rules. 12. Shri Rakesh Agarwal, learned authorized representative appearing for the department, however, reiterated the findings recorded in the impugned order and submitted that they do not call for any interference. Learned authorized representative pointed out that there is nothing on the record to show that the appellant had reversed the CENVAT credit attributed to the sale of electricity to the State Electricity Board in accordance with the procedure prescribe....
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....ars liable for penal action under Rule 15(1) of the Credit Rules 2004. 8. Now, therefore, M/s Hindustan Zinc Ltd., Zawar Mines, Udaipur are hereby called upon to show cause and explain to the Commissioner, Central Excise Commissionerate, Jaipur-II, New Central Revenue Building, Statue Circle, Jaipur within 30 days of receipt of this notice as to why; (a) The CENVAT credit amounting to Rs. 3,42,95,329/- should not be disallowed and recovered from them under Rule 14 of Cenvat Credit Rules, 2004 read with Section 11A(1) of the Central Excise Act, 1944 and the amount of Rs. 26,00,966/- already reversed by them, should not be appropriated into Govt. account. (b) Interest, on the wrongly availed Cenvat amount, should not be recovered from them under Rule 14 of the Cenvat Credit Rules, 2004 read with Section 11AA of the Central Excise Act, 1944; and, (c) Penalty should not be imposed upon them under Rule 15(1) of the Cenvat Credit Rules, 2004." (emphasis supplied) 16. The appellant filed replies to the show cause notices and pointed out that the credit availed by the appellant pertaining to electricity sold to the State Electricity Board had....
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....aipur has been accepted by the competent authority on merit. 14.8 I observe that in the above SCNs demand was made in respect of the amount of Cenvat Credit which was attributed to transfer of electricity to the sister concerns of the assessee and the amount of Cenvat credit attributed to the sale of electricity to other units i.e. M/s. AVVNL, out of which the amount of Cenvat credit attributed to the sale of electricity to other units i.e. M/s. AVVNL was proposed to be appropriated in the SCNs itself as the assessse already reversed the same before issuance of the SCN. I observe that the amount of Cenvat Credit attributed to the sale of electricity to other units i.e. M/s. AVVNL is calculated in the SCNs. I accordingly accept the amount of reversal of cenvat attributed to the sale of electricity to other units i.e. M/s. AVVNL. However, I observe that amount of reversal has been quantified but Whether the reversal has been made in accordance with Rule 6 of the CCR, 2014 or not has not been mentioned in the SCNs, nor the same is available in the records available. Accordingly, question of demand of interest on the the reversal of cenvat attributed to the sale of electricity....
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....ppellant towards the electricity sold to the State Electricity Board. 19. Section 11AA of the Central Excise Act deals with interest on delayed payment of duty. Sub-sections (1) and (2) of section 11AA are reproduced below: "11AA Interest on delayed payment of duty- (1) Notwithstanding anything contained in any judgment, decree, order or direction of the Appellate Tribunal or any court or in any other provision of this Act or the rules made thereunder, the person, who is liable to pay duty, shall, in addition to the duty, be liable to pay interest at the rate specified in sub-section (2), whether such payment is made voluntarily or after determination of the amount of duty under section 11A. (2) Interest, at such rate not below ten per cent and not exceeding thirty-six per cent per annum, as the Central Government may, by notification in the Official Gazette, fix, shall be paid in terms of section 11A after the due date by the person liable to pay duty and such interest shall be calculated from the date on which such duty becomes due up to the date of actual payment of the amount due." 20. It would be clear from the aforesaid provisions of section 11AA of th....
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....AA of the Central Excise Act when the amount of CENVAT credit taken by the appellant towards sale of electricity to the State Electricity Board had been reversed. If there was any violation of rule 6 of the 2004 Credit Rules, then the same had to be specifically pointed out in the show cause notice. The show cause notice does not allege that since rule 6 of the 2004 Credit Rules had been violated, interest would become payable in terms of section 11AA of the Central Excise Act read with rule 14 of the 2004 Credit Rules. The order passed by the Commissioner confirming the demand of interest under section 11AA of the Central Excise Act, therefore, cannot be sustained and deserves to be set aside. 25. The next issue that arises for consideration is whether penalty could have been imposed upon the appellant under rule 15(1) of the 2004 Credit Rules on the portion of the electricity sold by the appellant to the State Electricity Board. 26. No duty was payable by the appellant under section 11A of the Central Excise Act as the amount of credit availed by the appellant on the sale of electricity sold to the State Electricity Board had been reversed as reversal of credit amounts to n....