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TMI Blog2023 (11) TMI 467X X X X Extracts X X X X X X X X Extracts X X X X ..... was imposed on the appellant under Rule 15(2) of the CENVAT Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944. 2.1 Brief facts of the appeal are as given below:- 2.2 During the Audit of the accounts of the appellant, it was seen that the appellant have availed following wrong / double credits in their CENVAT Accounts: - i. CENVAT credit of duty paid on inputs, was availed twice on one and the same input documents (Annexure A of SCN). The excess CENVAT Credit taken thus is to the tune of Rs.89,75,790/- on 382 input documents. ii. Availed CENVAT credit twice on the same procurement, quoting two different source documents (Annexure B of SCN) on four occasions. While doing so, the appellant cited two different input documents as the basis for the credit. The wrong credit so availed, totally amounted to Rs.75,06,661/- iii. The appellant had also availed CENVAT credit of Rs.3,92,303/- twice, on 14 procurements of inputs citing same source documents with subtle differences having the same SAP reference (Annexure C of SCN). iv. They also availed CENVAT Credit of Rs.16,05,463/- (Annexure F of SCN) twice on the same input documents. 2.3 The appellant was al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t has submitted that interest is only payable when the wrong availment has caused benefit to the appellant or loss of revenue to the Government. Availment of credit twice on the documents was completely unintentional and due to negligence of their employee and the Government did not loose any revenue as they were having enough credit balance in their CENVAT accounts. He has argued that the adjudicating authority's reliance on the Apex Court's decision in the case of Union of India Vs. Ind-Swift Laboratories Ltd. [2011 (265) ELT 3 (SC)] is misplaced and is not applicable to the facts of this appeal. In the case of Ind-Swift Laboratories Ltd., fake invoice credit was involved whereas excess credit availed in the instant case is on account of human error. He has given a table which distinguishes the instant appeal from the case of Ind-Swift Laboratories Ltd. :- # Ind-Swift Laboratories Case Appellant Case 1 Credit based on Fake Invoices Credit availed twice unintentionally on the valid and eligible invoices; 2 Such credits resulted in non-payment of cash through PLA Even without availing credit twice unintentionally, it would not have resulted in CASH payment through PLA s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reting Rule 14 of the CENVAT Credit Rules, 2004, the attempt of the High Court to read down the provision by way of substituting the word 'or' by an 'And', so as to give relief to the assessee is found to be erroneous and once the CENVAT Credit is taken, as the beneficiary is at liberty to utilize the same immediately or thereafter interest is payable thus setting aside the order passed by the Punjab & Haryana High Court. 5. Heard both sides and carefully considered all the evidences available in the appeal. The following two issues arise for decision in this appeal:- i. Whether interest is demandable on irregular CENVAT Credit availed but not utilized? ii. Whether invocation of extended period of time and imposition of penalty under Rule 15(2) of the CENVAT Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944 is justified? 6. We find that there is another issue relating to availment of capital goods credit on ineligible goods. The appellant has availed input tax credit on Factory Lighting and Pallets. A perusal of the grounds of appeal indicate that the party has argued for eligibility of the credit on these goods which were utilized in the factory eithe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w of the aforesaid judgment of the Apex Court, the question of reading the word 'and' in place of 'or' would not arise. It is also to be noticed that in the aforesaid Rule, the word 'avail' is not used. The words used are 'taken' or 'utilized wrongly'. Further the said provision makes it clear that the interest shall be recovered in terms of Section 11A and 11B of the Act. 20. From the aforesaid discussion what emerges is that the credit of excise duty in the register maintained for the said purpose is only a book entry. It might be utilised later for payment of excise duty on the excisable product. It is entitled to use the credit at any time thereafter when making payment of excise duty on the excisable product. It matures when the excisable product is received from the factory and the stage for payment of excise duty is reached. Actually, the credit is taken, at the time of the removal of the excisable product. It is in the nature of a set off or an adjustment. The assessee uses the credit to make payment of excise duty on excisable product. Instead of paying excise duty, the cenvat credit is utilized, thereby it is adjusted or set off against the duty payable and a debit entr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee has promptly reversed the entry. In other words, he did not take the advantage of wrong entry. He did not take the Cenvat credit or utilized the Cenvat Credit. It is in those circumstances the Tribunal was justified in holding that when the assessee has not taken the benefit of the Cenvat credit, there is no liability to pay interest. Before it can be taken, it had been reversed. In other words, once the entry was reversed, it is as if that the Cenvat credit was not available. Therefore, the said judgment of the Apex Court has no application to the facts of this case. It is only when the assessee had taken the credit, in other words by taking such credit, if he had not paid the duty which is legally due to the Government, the Government would have sustained loss to that extent. Then the liability to pay interest from the date the amount became due arises under Section 11AB, in order to compensate the Government which was deprived of the duty on the date it became due. Without the liability to pay duty, the liability to pay interest would not arise. The liability to pay interest would arise only when the duty is not paid on the due date. If duty is not payable, the liabil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vokable and imposition of penalty sustainable? 7.2.1 It is on record that the appellant has reversed the entire CENVAT Credit wrongly taken or irregularly availed on being pointed out as a result of the Audit of its accounts. The appellant has not only reversed the credit irregularly availed, but also applicable interest. It is not disputed that they were having enough credit balance in their accounts and they have not utilized such irregularly availed CENVAT Credit toward payment of any duty. We find that the Show Cause Notice was issued on 17.06.2013 but the credit reversal was done on 31.08.2012 and 15.09.2012 which is much before the issuance of the Show Cause Notice. The availment of double credit or irregular credit was reportedly caused by the mischief of one of the employees of the appellant against whom they have taken disciplinary action by terminating his services. The appellant has contended that wrongly taken credit was never utilized and so no penalty is imposable. It was also submitted that the onus is on the Department to prove the intention to evade payment for invoking extended period under Section 11A(4) or proviso to Section 11A(1) of the Central Excise Act, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by word wilful in the section. Hence, presence of mensrea to evade duty has to be there. From the facts as discussed above since there has been prompt reversal by the appellant that too of a such amount which was meant for the appellants own both units, however was utilised only by one unit. Hence allegation of wilful misstatement with an intent to evade payment rather not at all justified. Though the adjudicating authority below had been right while dropping the demand on the same ground by holding it to be mere clerical error, they have definitely got wrong while still imposing penalty. The order accordingly is hereby set aside. Consequent to above discussion, appeal stands allowed." 7.2.2 We find that the appellant though have taken credit irregularly or wrongly in the books it was never utilized. So, it is not justified to attribute any motive to evade tax to the conduct of the appellant. Even irregularly availed CENVAT Credit has been reversed by the appellant on being pointed out much before the issuance of the Show Cause Notice. As such, invoking extended period is not justified in this appeal. Thus, the appellant succeeds on limitation also. 8. In view of the above findin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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