2018 (8) TMI 478 – CESTAT NEW DELHI – TMI – Liability of Interest and Penalty – reversal of wrongly availed CENVAT Credit before issuance of SCN – whether the appellants are liable to pay interest and penalty on the wrongly availed Cenvat Credit amounting to ₹ 94,208/- despite the fact that much before the issuance of show cause notice they have reversed the same?
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Held that:- The appellants immediately reversed the Cenvat Credit wrongly availed by them on pointing out by the Department. This itself shows that there is no intention on the part of the appellants to evade payment of tax rather they were having sufficient balance in their Cenvat Credit account – To attract levy of penalty as per the provisions of Section 11AC of the Central Excise Act 1944 the Revenue has to prove that the appellant has availed the Cenvat Credit wrongly by reason of fraud or collusion or any willful misstatement or suppression of facts, which the Department has failed to establish in the prese
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n the wrongly availed Cenvat Credit amounting to ₹ 94,208/- despite the fact that much before the issuance of show cause notice they have reversed the same. This issue pertains to wrong availment of Cenvat Credit of ₹ 94,208/- on the basis of bill of entry dated 12/12/2013 which was in favour of the appellant s sister concern situated at the same address as that of the appellant i.e. 18/04, Mathura Road, Faridabad, Haryana. 3. During the course of audit by the departmental officers in the month of January, 2016 the discrepancy for the period 2013-14 was pointed out to the appellants and they realized their mistake and without contesting or awaiting for show cause notice, they immediately paid back the amount of ₹ 94,208/- on 25/02/2016 itself to avoid any penal action. A show cause notice for the wrong availment of Cenvat Credit was issued to the appellants on 16/05/2016 and the same was adjudicated vide Order-in-Original dated 31/03/2017 by which the adjudicating aut
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even before the issuance of show cause notice. He further submitted that although mistake is there but the same is not deliberate or willful to cause a loss to the Government Exchequer. He also submitted that the appellants had sufficient balance of Cenvat Credit in their account throughout the period of wrong availment and they did not utilised the wrongly availed credit. 5. The Ld. AR appearing for the Department reiterated the findings recorded in the impugned order. 6. It is not disputed that on pointing out by the audit team of the Department immediately the appellants reversed the credit on 25/02/2016 whereas the show cause notice for the same was issued on 16/05/2016. In other words the appellants immediately reversed the Cenvat Credit wrongly availed by them on pointing out by the Department. This itself shows that there is no intention on the part of the appellants to evade payment of tax rather they were having sufficient balance in their Cenvat Credit account. To attract lev
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ngalore V/s Bill Forge Pvt. Ltd. 2012 (26) STR 204 (kar.) has held that since the appellants therein was having sufficient balance in their Cenvat Credit account, therefore, the appellant is not liable to pay the interest. The relevant extract of the said order is as under:- 5. Heard the parties. Considered the submissions. Issue of Interest It is a fact on record that the appellant was having sufficient balance in their Cenvat credit account. Therefore, following the ration laid down by Hon ble Karnataka High Court in the case of Bill Forge (supra), the appellant is not liable to pay the interest. Therefore, the demand of interest made in impugned order is set aside. Imposition of penalty In this case, the appellant immediately reversed the cenvat credit excess availed by tem on pointing out by the department. Therefore, in that circumstances, malafide cannot be attributable against the appellant and no proceedings were required to be initiated against the appellant under section 11A
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