TMI Blog2016 (6) TMI 761X X X X Extracts X X X X X X X X Extracts X X X X ..... efore, the recovery of the irregularly availed credit in excess of 50% (Rs.16,22,615/-) is not justified. Taking into consideration the violation of the provision,it is find that appellants are liable to pay the interest on the irregularly availed credit on capital goods. The contention raised on behalf of appellant is that, the appellants did not utilize the credit availed and therefore there is no interest liability it is held that in the peculiar facts, when the appellant has contravened the provisions, the Revenue has to be compensated for the irregular credit availed. In view thereof, the demand/recovery of credit is set aside, whereas the demand of interest on the said amount is sustainable. The appellant is liable to pay interest on the amount till the date of reversal or if not reversed, till date on which the appellant could have availed remaining 50% credit on capital goods in the subsequent year. Enhancement of penalty - Held that:- d. In the instant case, the adjudicating authority has not imposed any penalty for irregular availment of credit on capital goods. If no penalty is imposed, the department has to file an appeal challenging the non-imposition of penalty. On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authority confirmed the recovery of ₹ 1,44,146/- being the irregular credit taken on steel items, along with interest. In addition, the credit of ₹ 16,22,615/- on capital goods was also disallowed and ordered recovery of the same along with interest. The original authority imposed equal amount of penalty of ₹ 1,44,146/- under Section 11AC of the Act for irregular availment of credit on steel items. No penalty was imposed by adjudicating authority for irregular availment of credit on capital goods of ₹ 16,22,615/-. 2. Aggrieved by the Order-in-Original, the appellants filed appeal before the Commissioner(Appeals). While this appeal was pending the Commissioner(Appeals) served upon the appellants, a show-cause notice dt. 20/07/2011 invoking Section 35A(3) of Central Excise Act, 1944 as to why penalty should not be enhanced from nil penalty for irregular availment of credit on capital goods. The appellants defended the show-cause notice contending that as no penalty was imposed by the original authority on the count of irregular availment of credit on capital goods there is no question of enhancement of penalty. That fresh imposition of penalty is beyond the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d AR supported the findings in the impugned order. He submitted that admittedly the steel items were used for support structure, foundation and fixtures of the cement plant. That credit on these steel items is therefore not admissible and the disallowance of credit and demand of interest and penalty imposed is legal and proper. Secondly, the appellant has contravened the provisions of CENVAT Credit Rules and availed entire credit on capital goods in the same year. This was shown in the ER-1 returns as credit availed on inputs. These items like air slide, bucket elevator, part of roto packer, truck loading machine, conveyor belts are all capital goods / spares / accessories / parts. These goods fall into the definition of capital goods and the appellant ought not to have availed 100% credit in the same year. Having contravened the provisions of law, the Commissioner(Appeals) has rightly enhanced the penalty and imposed penalty of ₹ 1,60,000/- for irregular availment of credit on capital goods. 5. I have heard the rival submissions. The first issue is the denial of credit on MS items. The facts brought out from record reveal that MS items were used by appellant for fabricati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Bucket elevator. Exhaust of cement from various outlets to the Pollution Control Equipment is filtered by a BAG FILTER. Apart from these, a POWER TROLLEY is used for dismantling and erection of the equipments, AIR COMPRESSOR, VACCUM PUMPS are used for pneumatic control of loading and unloading of cement and the power supply is drawn through a 1000KVA TRNASFORMER. Entire equipments and the system is monitored electronically through control panels named MCC Panel PCC panel. 7. The original authority has stated that these items are used as such in the factory, as parts/components of the cement plant/machinery and therefore are capital goods. I do not find any evidence to take a different view. The allegation with regard to the credit availed on these items like air slide, bucket elevator, roto packer etc. is that being capital goods, the appellants availed 100% credit in the same year. Appellants were eligible to take 50% credit in the year of receipt and 50% in subsequent year. Availing entire credit in the same year is in contravention of the provisions of the CENVAT Credit Rules, 2004. The authorities below have therefore ordered recovery of 50% of the irregular credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eady imposed. In the instant case, the adjudicating authority has not imposed any penalty for irregular availment of credit on capital goods. If no penalty is imposed, the department has to file an appeal challenging the non-imposition of penalty. Only then can the Commissioner consider whether a penalty not imposed can be imposed. Section 35A does not empower the Commissioner(Appeals) to impose a fresh penalty under the guise of enhancement. The Commissioner(Appeals) has proceeded as though some penalty (nil penalty) is imposed by the adjudicating authority and that he is enhancing the nil penalty. Under no stretch of imagination can there be imposition of nil penalty. Either penalty is imposed or no penalty is imposed. The no penalty situation cannot be taken as nil penalty and be enhanced under Section 35A(3) of the Central Excise Act. When the Department has not filed appeal for non-imposition of penalty, the Commissioner(Appeals) cannot impose a new penalty invoking Section 35A(3). The penalty of ₹ 1,60,000/- imposed by Commissioner(Appeals) invoking Section 35A(3) is beyond his powers and therefore is set aside. 10. In view of the foregoing discussions, the impugned ..... X X X X Extracts X X X X X X X X Extracts X X X X
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