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TMI ID= 266277
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  • Cases Cited

2015 (10) TMI 1552 - CESTAT NEW DELHI

M/s Amba Poly Crome (P) Ltd. Versus Commissioner of Central Excise, Chandigarh II

Denial of CENVAT Credit - Penalty u/s 11AC - Held that:- In the show cause notice itself allegation against the appellant is that they have taken the excess Cenvat credit wrongly. If appellant has taken cenvat credit wrongly, it means that he have taken the cenvat credit by mistake not with intention to take inadmissible cenvat credit. When show cause notice itself is alleging that appellant has taken cenvat credit wrongly and same has been supported by earlier audit. When the facts of wrong availment of credit was pointed out to the appellant they reversed the excess cenvat credit availe by them. In these circumstances, I hold that extended period of limitation is not invokable relying on the decision of Tribunal in the case of Yashwant Industries (2011 (1) TMI 997 - CESTAT, MUMBAI) - for the period the appellant has reversed the excess cenvat credit availed along with interest. As allegation against the appellant is that they have taken cenvat credit wrongly, it means that they have taken the cenvat credit by mistake. In these circumstances, penalty under Rule 15 of the Cenvat Credit Rules, 2004 read with Section 11 AC of the Central Excise Act is not imposable. - Impugned order is set aside - Decided in favour of assessee.

No.- Excise Appeal No. 57964 of 2013-(SM)

Dated.- May 22, 2015

Citations:

  1. Rajasthan State Warehousing Corp. Versus Commissioner of Central Excise, Jaipur - 2011 (3) TMI 251 - CESTAT, NEW DELHI

  2. Vikas Automatic Fasteners Pvt Ltd., Versus Commissioner of Central Excise, Nagpur & Commissioner of Central Excise, Aurangabad Versus Yeshwant Industries & Others. - 2011 (1) TMI 997 - CESTAT, MUMBAI

  3. AGRICO ENGG. WORKS (INDIA) PVT. LTD. Versus COMMR. OF C. EX., MEERUT - 2000 (10) TMI 72 - CEGAT, COURT NO. II, NEW DELHI

Ashok Jindal, Member (J),J.

For the Appellant : Shri Prabhat Kumar, Adv.

For the Respondent : Ms Ranjana Jha, AR

ORDER

Per: Ashok Jindal:

The appellant is in appeal against the impugned order confirming the demand on account of wrong availment of cenvat credit by the appellant.

2. The facts of the case are that the appellant is a manufacturer of HDPE Fabric/ bags. The appellant procured goods from M/s. Reliance Industries Ltd. (100% EOU) the polypropylene granules and availed cenvat credit thereon fully. But as per Rule 3(7) of Cenvat Credit Rules, 2004, the appellant was entitled to take cenvat credit as per the formula prescribed under Rule 3(7) of Cenvat Credit Rules. The show cause notice was issued on 18.2.2011 to allege that during the period June, 2007 to April, 2009, the appellant has taken cenvat credit wrongly and not as per formula prescribed under Rule 3(7) of Rules. The proceedings were initiated by way of show cause notice. Matter was adjudicated and excess cenvat credit availed by the appellant was denied and Cenvat credit which is within the period of limitation was paid by the appellant and same was appropriated in demand for the later period is confirmed along with interest and equal amount of penalty was also imposed on the appellant. Aggrieved from the said order, appellant is before me.

3. Learned counsel for the appellant submits that the audit took place in the premises of the appellant on 28.2.08 for the period January, 2005 to December, 2007 by internal audit team Group 4. Again in March, 2008 audit was done by CERA for the period March,2008 and finally audit was done by Central Excise audit team Group 4 for the period from 15.3.10 to 18.3.10 for the audited period from January, 2008 to February, 2010. The Central Excise Audit team Group infact pointed out to the appellant that they have taken Cenvat credit as per formula prescribed under Rule 3(7) of Cenvat credit Rules, 2004. The appellant immediately on pointing out, reversed the Cenvat credit of ₹ 5,67,730/- which was pertaining to the period of limitation but show cause notice was issued by invoking extended period of limitation.

4. Therefore, extended period of limitation is not invokable and it was only a mistake of the appellant having availed the cenvat credit and therefore, penalty on the appellant is not imposable. To support this contention, he relied upon decision of this Tribunal in the case of CCE, Aurangabad vs. Yashwant Industries [2014 (313) ELT 667 (Tri-Mum)]; Rajasthan State Warehouse Corpn vs. CCE Jaipur [2011 (23) STR 385 (Tri-Del)]. 

5. On the other hand, learned AR opposed the above contention of the appellant and submits that she has written a letter to the department and call a report and therefore the matter be adjourned. She further submits that appellant has supplied the record which is to be examined. Therefore same cannot be examined at this stage. On merits, she submits that as the appellant was aware that he is not entitled to take cenvat credit fully as per formula prescribed under Rule 3(7) of CCR, 2004. Therefore they have taken inadmissible cenvat credit.

6. Heard the parties. Considered the submissions.

7. On last date of hearing, the learned AR sought time on same ground and the time was granted but the learned AR could not get reported from the department. The report was never called by the Bench and is not required for consideration. Therefore, I proceed with case to decide on its merits.

8. I have gone through the show cause notice also. In the show cause notice itself allegation against the appellant is that they have taken the excess Cenvat credit wrongly. If appellant has taken cenvat credit wrongly, it means that he have taken the cenvat credit by mistake not with intention to take inadmissible cenvat credit. When show cause notice itself is alleging that appellant has taken cenvat credit wrongly and same has been supported by earlier audit. When the facts of wrong availment of credit was pointed out to the appellant they reversed the excess cenvat credit availe by them. In these circumstances, I hold that extended period of limitation is not invokable relying on the decision of Tribunal in the case of Yashwant Industries (supra) wherein the Tribunal has under:

"5. After hearing the ld. DR, we found that on merits, the respondents do not have any case, as it is well settled law that the cost of moulds and dies are to be amortized in the assessable value of the goods cleared by the respondents. The only issue emerges from the impugned order and the submissions of the ld. DR is that whether the extended period of limitation is invocable or not on the basis of audit conducted by the department at the premises of the respondents. From the impugned order, we take note of that the respondents took defence before the lower appellate authority that the internal audit was conducted by the department frequently in their premises and the audit party never raised any objection for non-inclusion of amortized cost of moulds and dies in the assessable value of the goods cleared by them. It is also evident from the audit report brought on record by the lower appellate authority that during the course of audit, the following documents were scrutinized viz., (a) purchase orders issued on the respondents by M/s. Bajaj Auto Ltd., (b) Challans and invoices issued by M/s. Bajaj Auto Ltd., under the cover of which the moulds and dies were sent to the respondents and (c) invoices issued by the respondents under Rule 52A under the cover of which the goods manufactured by them were sent to M/s. Bajaj Auto Ltd. We further find that the challans and invoices on which M/s. Bajaj Auto Ltd. had supplied the moulds and dies to the respondents in free of cost on loan basis was on record during the course of audit before the audit party and the audit party did not take any objection that the respondents have not amortized the cost of moulds and dies in the assessable value of the parts cleared to M/s. Bajaj Auto Ltd. It is also on record that the statements of the respondents have been recorded in January, 1999 and a show-cause notice has been issued in November, 2000. In that event, when the audit party has not taken any objection for non-inclusion of the amortized cost of moulds and dies in the assessable value by the respondents, allegation of suppression does not survive as held by the lower appellate authority. The case laws cited by the Ld. DR are not relevant to the facts of the case as in those cases no audit took place when the suppression was alleged. It is the duty of the audit party to audit the records and to point out the discrepancies found out during the course of audit. In the case of Agrico Engineering Works (India) Pvt. Ltd. (supra) only a visit was done by the preventive party and there was no audit conducted, hence, these case laws are of no help to the Revenue. We do agree with the findings of the lower appellate authority and do not find any reasons to interfere with the same. Accordingly, the impugned. order is upheld, the appeals filed by the Revenue are rejected. "

9. Further, I find that for the period the appellant has reversed the excess cenvat credit availed along with interest. As allegation against the appellant is that they have taken cenvat credit wrongly, it means that they have taken the cenvat credit by mistake. In these circumstances, penalty under Rule 15 of the Cenvat Credit Rules, 2004 read with Section 11 AC of the Central Excise Act is not imposable.

10. In these terms, impugned order is set aside. Appeal is allowed with consequential relief, if any.

(Dictated and pronounced in the open court)

 
 
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