2007 (10) TMI 86 - AT - Central Excise

Availment of credit twice on the same invoice by mistake resulted in clearance of goods without having sufficient balance in RG 23A Mistake detected suomoto by appellant & rectified within 2 months so penalty is reduced from 50, 000 to 1, 000 Interest @ Rs 1000 is reduced to 2% per annum

Summary

Issues:
1. Wrong availment of Cenvat credit leading to clearance of goods without payment of duty.
2. Applicability of Rule 8(3) of the Central Excise Rules, 2002.
3. Penalty imposition for inadvertent mistake in Cenvat credit utilization.

Analysis:
1. The case involved the appellants mistakenly taking Cenvat credit twice based on the same document, resulting in clearance of goods without sufficient balance in the RG 23A account. The appellants argued that the correct provision was Rule 14 of the Cenvat Credit Rules for wrong availment of credit, not Rule 8 dealing with clearance of goods and payment of duties. The Tribunal held that Rule 8(3) was correctly invoked as the goods were cleared without payment of duty by the 5th of the following month, violating Rule 8 requirements.

2. Regarding the interest charged, the Tribunal noted that the interest rate of Rs. 1000/- per day under Rule 8(3) was deemed ultra vires by the Rajasthan High Court. Thus, the interest was adjusted to 2% per annum as per Rule 8(3) provisions. The appellants' argument for a lower interest rate was accepted based on legal precedents.

3. The penalty imposition was contested by the appellants, citing the inadvertent nature of the mistake and voluntary rectification within two months. Despite the violation of Rule 25 due to goods clearance without sufficient balance, the Tribunal reduced the penalty from Rs. 50,000/- to Rs. 1,000/- considering the timely rectification by the appellants. The appeal was partly allowed based on these findings.