2018 (11) TMI 829 – CESTAT MUMBAI – TMI – Imposition of penalty – suppression of alleged availment of inadmissible credit even after subsequent reversal upon audit noting before issue of show cause – Held that:- Admittedly, appellant’s availment of Cenvat credit which was held by the audit party is inadmissible is not being questioned in this appeal about its legality. In his Order-in-Appeal the commissioner has distinguished the appellant’s case in respect of earlier decisions concerning the appellant on similar issue passed by the adjudicating authority and he hold that previous audit cannot be taken as a plea of non-suppression.
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Section 11AC which deals with penalty on short levy or non levy of duty clearly indicates under 1(C) that such suppression of fact must have been done with intend to evade payment of duty and the intention of the appellant is found absent in the sense that its availment of allegedly inadmissible credit was previously subjected to scrutiny by the audit
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AGM for appellant Shri S.J. Sahu, Assistant Commissioner (AR) respondent ORDER Imposition of penalty on ground of suppression of alleged availment of inadmissible credit even after subsequent reversal upon audit noting before issue of show cause is the subject matter of this appeal. 2. Brief fact of the appellant s case is that it is a large tax payer which is subjected to CERA and EA-2000 audits every year. During EA audit conducted in the month of June 2016 it was brought to the notice of appellant that certain inadmissible Cenvat Credits were availed by the appellant for the period between Oct-11 to Mar-15 amounting to ₹ 8,71,885/- and the same was immediately reversed on 30th June 2016 itself. But it was put to show cause vide notice dated 04.11.2016 to show reason as to why penalty under Section 11AC of Central Excise Act 1944 read with rule 15(2) of CENVAT Credit Rules, 2004 was not to be imposed for willful suppression of fact with intend to evade payment of duty as well
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ct of the appellant since entire allegedly erroneous credit is only 0.2% of the total availed of credit of ₹ 45,37,57,775/- covering 72,266 numbers of invoices and error might have occured in handling such huge volume of data. The Learned Counsel for the appellant Shri Jitendra Khare & Shri Kishore Ahjuja further submitted that in the previous occasions, on similar situations, favourable Order-in-Originals had been passed in favour of appellant and the same may be treated as judicial precedent in setting aside the order. 4. In response to such submissions of the appellant, the Learned AR for the Department Shri S.J. Sahu supported the order of the Commissioner (Appeals) and the rationality of his findings. Referring to the discussion made by the Commissioner (appeals) at Para 40, he submitted that appellant had misstated the description of services as manpower salary, wages but the expenditure covered was towards reimbursement of travelling expenses, hotel bill of staff debit
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g the appellant on similar issue passed by the adjudicating authority and he hold that previous audit cannot be taken as a plea of non-suppression. To him audit is nothing but vouching a document in a selective and comprehensive way but it is not a complete checking of each and every document for which it cannot be said that there was no suppression or non disclosure of fact since it was appellant s responsibility to bring facts of availment of credit which they failed to do. However, in order to find out the purpose of audit, reference is made by me to the Manual published by the Institute of Chartered Accountants of India in respect of EA audit and CERA audit. Under Chapter 17 it has been reflected that the idea behind such conduct of verification is to reasonably ensure that no amount, which under the central excise law is chargeable as duty, escapes taxation and the process of verification is always carried out in the presence of assessee. In the process, the auditor is required to
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he OIO and OIA, the credit was held to be inadmissible on the ground that after sale services credit should not go to the manufacture but nowhere it has been referred that sale was done by the third party other than the manufacturer itself but there is no point in discussing on the merit of admissibility of the credit since the same is accepted by the appellant and not challenged though there is a difference between acceptance of the direction of the executive authority and imposition of tax without compliance to Article 265 of the Constitution of India. 7. Appellant has placed heavy reliance on the case law reported in 2015-TIOL-223-SC-CX in the matter of Commissioner of Central Excise, Bangalore vs. Pragathi Concrete Products (P) Ltd. where in the Hon ble apex court in Para 3 has observed as follows: It is also found as a matter fact, that the unit of the respondent was audited during this period several times and there were physical inspection by the Department as well. Therefore, t
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