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2014 (2) TMI 545 - AT - Central ExciseReversal of CENVAT Credit - removal / return of inputs as such - Import of base oil - Penalty u/s 11AC - Held that:- it is the fact that the appellant had cleared the base oil so obtained on payment of duty by reversing the CENVAT credit taken on the base oil. Under the CENVAT Credit Rules, 2004 when inputs are cleared as such, the appellant is liable to discharged duty liability thereon by reversing the CENVAT credit taken which the appellant has done in the instant case and therefore, the question of recovery of CENVAT credit which has already been reversed at the time of clearance of base oil cannot be sustained in law as it would amount to double demand of duty - Therefore, the confirmation of demand once again on base oil is not sustainable in law. Levy of interest on Reversal of Cenvat Credit - Held that:- The hon'ble apex court in Union of India vs. Ind-Swift Laboratories Ltd.- [2011 (2) TMI 6 - Supreme Court] held that Rule 14 of the CENVAT Credit Rules, 2004 specifically provides for interest on CENVAT credit taken or utilized wrongly or erroneously refunded. Therefore, interest on irregular credit arises from the date of taking of such credit. Whether the extended period of time could be invoked - Held that:- they had declared the taking of credit in ER-1 returns. We have also perused the ER-1 Returns available on record. It is seen that the details of the documents on the strength of which credit has been taken is reflected in the said returns. However, it is nowhere declared that the goods on which credit has been taken is not intended for use in or in relation to the manufacture of excisable goods. Arrangements which the appellant had with VCL for the storage of the goods and its return as and when needed was never disclosed to the department. In these circumstances, the invocation of extended period of time for denial of credit is clearly sustainable in law. Whether the appellant is liable to penalty under Rule 15 or under 26 of the CENVAT Credit Rules, 2004 - Held that:- appellant even though had taken the credit wrongly, did not utilize the said credit at any point of time. This clearly shows that the appellant had no intention to evade any duty. Therefore, in the absence of any mens rea, it is difficult to sustain imposition of equivalent amount of penalty under Rule 15 read with Section 11AC on the appellant. Accordingly, we set aside the penalty imposed on the appellant under the said provisions of law. On the same ground we do not find any reason to impose penalty under Rule 26 of the Central Excise Rules, 2002 and therefore, the same is also set aside.
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