2018 (10) TMI 824 – CESTAT CHENNAI – TMI – Demand of Interest and penalties – Distribution of CENVAT Credit – violation of Rule 7 of Cenvat Credit Rules, 2004 – excess credit distributed to three units – reversal of credit before issuance of SCN – Held that:- The present appeals pertain to three Units. For two other units for the same very issue, the Commissioner (Appeals) has waived the penalties – following the same, penalties set aside – impugned order is modified to the extent of waiving penalties and without disturbing the demand or the interest thereof – appeal allowed in part. – E/41553 to 41555/2018 – 42571-42573/2018 – Dated:- 5-10-2018 – Smt. Sulekha Beevi C.S, Judicial Member For the Appellant : Ms. G. Vardini Karthick, Adv. For the Respondent : Shri L. Nandakumar, AC (AR) ORDER The appellants are engaged in manufacture of Oil Seals, Moulded Rubber Products etc., and are availing the facility of Cenvat credit of duty paid on inputs, capital goods and service tax paid on inp
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Tribunal. 2. On behalf of the appellants learned counsel Ms. Vardini Karthick submitted that the appellants are contesting only the interest and penalty imposed by the authorities below. She argued that the appellants had reversed the credit before utilization. The appellants had sufficient credit balance in their cenvatable account during the disputed period and, therefore, the interest and penalty imposed cannot sustain. It is submitted by her that the period involved is Apr. 14 to Aug. 14. An amendment was brought forth by Notification No.21/04-CE (NT), dated 11.07.2014 so as to restrict the distribution of credit by head office on prorata basis. The period under dispute is a transition period and the appellants had distributed the credit on the bonafide belief that they are eligible for such distribution. She, therefore, pleaded to set aside the interest as well as penalties. It is also argued by her that in respect of two other Units by Order-in- Original No.68/17, dated 11.01.20
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noteworthy and is reproduced as below:- 7.3 In view of Rule 12A[4] of the Cenvat Credit Rules, the credit taken by one Unit under LTU could be transferred to another Unit in LTU and, therefore, the turnover based distribution of ISD could be overcome by this special provision. It was only after issue of Notification No.21/2014-CE(NT), dated 11.07.2014 that this privilege was withdrawn. Further, it is also to be remembered that whatever amount was distributed as excess to the appellant s Unit resulted in equal reduction of credit passed on to the other Units of the appellant s-Company. This wrong distribution was caused by incorrect computation of turnover of the respective Units, but the net effect of it is revenue-neutral. Finally, I find that the appellant had accepted the mistake as soon as it was pointed out to them and reversed the excess credit in their ER-1 returns for December, 2015 and February, 2016 without even waiting for a show-cause notice. Further, proceedings with resp
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