2010 (5) TMI 447 - AT - Central Excise

Penalty cenvat credit wrongly availed - capital goods/inputs which were used in the Application Research Centre and Product Development Research Centre was within the factory premises to the appellant reversal of cenvat credit - appellant had not challenged the reversal - appellant had not challenged the confirmation of the demand of the duty - lower authorities order so as to raise contention for non-imposition of penalty - penalty imposed by the ld. Commissioner (Appeals) under the Rule 13 of the Cenvat Credit Rules is not sustainable - penalty imposed by the ld. Commissioner (Appeals) under Rule 13 is set aside

Summary

Issues:
Imposition of penalty and interest on inadmissible Cenvat credit taken by the appellant.

Imposition of Penalty:
The appeal challenged the Order-in-Appeal confirming the demand and penalties imposed by the adjudicating authority. The appellant had wrongly availed credit on duty paid capital goods/inputs in their research centers, which was later reversed. The Revenue filed an appeal against dropping proceedings for interest and penalty. The appellant argued they never utilized the credit and were eligible for it. The Tribunal found that the appellant had reversed the inadmissible credit as directed, and since they did not challenge this reversal, they could rely on it to contest the penalty. The Tribunal concluded that the penalty imposed by the Commissioner was not sustainable under Rule 13 of the Cenvat Credit Rules and set it aside.

Interest on Cenvat Credit:
The appellant had utilized the credit amount for some time, as evidenced by statements, leading to interest liability. The Tribunal upheld the interest liability determined by the Commissioner as the appellant did not challenge the confirmation of the demand. Despite arguments about having enough balance in their Cenvat account, the Tribunal found the interest liability valid due to the appellant's utilization of the credit. Thus, the appeal against interest liability was rejected.

In conclusion, the Tribunal allowed the appeal against the penalty imposition but rejected the appeal against the interest liability. The decision was made based on the appellant's reversal of inadmissible credit and utilization of the credit amount, leading to the upheld interest liability.