2018 (9) TMI 1052 - AT - Central Excise

Levy of Interest and Penalty - credit availed wrongly on capital goods, was reversed subsequently - Held that - This Bench in the case of M/s. Lenovo India Pvt. Ltd. Vs. C.C.E. Puducherry 2018 (7) TMI 243 - CESTAT CHENNAI where reliance placed in the case of Commissioner of Central Excise, Madurai Vs. Strategic Engineering 2014 (11) TMI 89 - MADRAS HIGH COURT , where it was held that mere taking itself would not compel the assessee to pay interest as well as penalty - demand of interest and penalty set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Levy of penalty and interest on excess credit availed on capital goods.

Detailed Analysis:
The appellant challenged the findings of the Ld. Commissioner of Customs and Central Excise (Appeals) regarding the levy of penalty and interest on the excess credit taken on capital goods. The Original Authority had demanded repayment of the excess credit amount and ordered its appropriation. It was noted that the appellant had already reversed the excess credit before the Show Cause Notice was issued.

During the hearing, the appellant's Advocate argued that they were only contesting the penalty and interest, not the order on merits. The Advocate highlighted a previous Tribunal decision in favor of the assessee based on similar facts and the decision of the jurisdictional High Court.

The Department Representative supported the findings of the lower authorities. However, the Member (Judicial) considered the arguments and reviewed the orders on record. Referring to a previous Tribunal case involving M/s. Lenovo India Pvt. Ltd., the Member noted that the issue of wrongly availed CENVAT credit, subsequently reversed without utilization, was addressed by the jurisdictional High Court. The High Court's decision clarified that mere availing of credit without utilization did not warrant payment of interest or penalty.

In line with the High Court's ruling, the Member held that the appellant was not liable to pay interest or penalty. Consequently, the impugned order was set aside, and the appeal was allowed, granting any consequential relief. The penalty and interest confirmed by the Ld. Commissioner (Appeals) were overturned, and the appeal was allowed.