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2015 (2) TMI 1147 - AT - Central ExciseCapital goods CENVAT Credit - whether the appellant would be liable to pay interest under Section 11AB on the wrongly taken capital goods CENVAT Credi and penalty under Rule 13(2) of CENVAT Credit Rules, 2001 read with Section 11AC of Central Excise Act, 1944? - Entitlement to exemption under a notification No. 15/94-C.E. dated 1-3-1994 which is subject to non-availment of CENVAT Credit in respect of inputs/input services or capital goods would be available when initially such CENVAT Credit had been taken but was reversed subsequent to clearance of the goods - Held that:- Since in the present case, there is no dispute that entire CENVAT Credit, though wrongly and fraudulently taken, has been reversed, we hold that the appellant cannot be denied the benefit of exemption Notification No. 14/2002-C.E. during period from 1-3-2002 to 31-3-2003 as for the purpose of this exemption the appellant would have to be treated as not having availed any capital goods or inputs duty CENVAT Credit. On a conjoint reading of Section 11AB and Rules 3 and 4 of the Cenvat Credit Rules we proceeded to hold that the interest would be payable from the date Cenvat credit is wrongly utilized. No reason to read the word “OR” in between the expressions ‘taken’ or ‘utilized wrongly’ or ‘has been erroneously refunded’ as the word “AND”. On the happening of any of the three circumstances such credit becomes recoverable along with interest. Where the entire duty had been paid along with interest before the issuance of show cause notice but still in the adjudication order no option was given by the Commissioner to pay 25 per cent. of the amount of duty demand confirmed towards penalty within 30 days in terms of proviso to Section 11AC, the benefit of lower penalty cannot be denied and that in such cases, the penalty imposable would be 25 per cent. of the duty demand. But in this case, the conditions set down in the case of K.P. Pouches [2008 (1) TMI 296 - DELHI HIGH COURT ] are not satisfied as the appellant have not paid the interest under Section 11AB on the wrongly taken CENVAT Credit, which as discussed above, is leviable. In view of this we hold that the benefit of lower penalty in terms of proviso to Section 11AC is not available to the appellant. As regards penalty under Rule 26 of the Central Excise Rules, 2002 on Sh. Vineet Sethi. The impugned order does not discuss as to how the elements required for attracting the penal provisions of this Rule are present in this case. Hence, the penalty on Sh. Sethi has been set aside. Thus while the duty demand of ₹ 2,24,81,249/- against the appellant in respect of the clearances of grey cotton fabrics during period from 1-3-2002 to 31-3-2002 along with interest thereon under Section 11AC and penalty of equal amount is set aside, the CENVAT Credit demand of ₹ 66,69,432/- against the appellant along with interest and penalty of equal amount is upheld. As regards, the penalty of ₹ 50,000/- under Rule 26 of Central Excise Rules, 2002 on Sh. Vineet Sethi is imposed, the same is set aside. Thus, while the appeal filed by M/s. Orient Texfabs Ltd. is partly allowed the appeal filed by Sh. Vineet Sethi is also allowed.
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