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2023 (9) TMI 1134 - AT - Central ExciseBenefit of N/N. 1/2011 dated 1.3.2011 - credit availed on inputs and input services used in the manufacture of the final products on which the concessional rate of duty is being availed - levy of penalty - HELD THAT:- The appellant manufactures foam and foam products and rubberised coir products. On foam products, standard rate of duty 12% is being discharged and accordingly, credit is availed on all inputs and input services. Foam is also captively used in the manufacture of Rubberised coir mattresses for which concessional rate of duty is availed and therefore, credit cannot be availed as per the exemption Notification No. 1/2011 dated 1.3.2011. The appellant admits the fact that they are aware of the fact that on rubberised coir mattresses, they are not supposed to avail CENVAT credit on inputs and inputs services in as much as they were claiming concessional rate of duty - when all other units were strictly following the conditions of the exemption Notification, how could this contravention by this unit go unnoticed by their own audit officers during the submission of the financial statement of the company. Whether there was any violation of the conditions of the exemption Notification as the mistake once noticed was made good by reversing the entire credit along with interest? - HELD THAT:- The irregular availment of credit came to the notice of the department only after the officers of internal audit party visited their unit and verified their records. The Commissioner at para 29 of the impugned order also notes that “on one hand, the noticee claim that they have taken a policy decision to clear the goods on payment of 1% duty and on the other, they claim that there was confusion in their minds regarding CENVAT credit to be availed. It cannot be accepted that the contravention has not come to the notice of the noticee either at the time of their internal audit, statutory audit or during the preparation of the financial statement of the company - it is very clear that the appellant had consciously taken CENVAT credit which was irregular. Hence, having suppressed the facts, the Commissioner was right in invoking the Proviso to Section 11A. Penalties on Shri Kushroo, Engineer, Head of Finance; Shri M. S. Kamath, Vice President and Shri T. Sudhakar Pai, Chairman and Managing Director, the only allegation in the show-cause notice is that they are decision makers on the statutory matters of the company - HELD THAT:- But there are no specific allegations specified to allege their involvement in taking irregular credit by the company in spite of a policy decision was taken by the Senior Officers of the company not to avail credit. The error committed by the ground level officers cannot be alleged to be done with the knowledge of the above senior officers. Therefore, the Chairman and Managing Director of the company, the Vice President and Head of Finance cannot be penalized. It is also a fact that as and when it came to their knowledge, they ordered immediate reversal of credit of Rs.1,57,29,304/- hence, the penalty imposed on them is set aside. Appeal is disposed of by way of remand only for redetermination of penalty under Rule 25 read with Section 11AC of the Central Excise Act, 1944.
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