CESTAT sets aside Penalty imposed on Duty Liability of Input Tax Credit availed in respect of Electricity Cogeneration plant [Read Order]

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chennai set aside penalty imposed on duty liability of input tax credit availed in respect of Electricity Cogeneration plant.

The appellant, M/s.Sakthi Sugars Ltd who is engaged in manufacture of Sugar, Molasses and Industrial Alcohol is registered with the Department for manufacture of the final products. They were availing the facility of cenvat credit of service tax paid on various inputs services. During the conduct of audit in August 2008, it was noticed that appellant has availed wrong credit on input services used in the Co-generation plant for generation of electricity which was being wheeled out to T.N.E.B. They also availed credit on input services used for manufacture of Ethyl Alcohol.

On being pointed by audit officers, the appellant paid the amount by reversing the credit. Thereafter, show cause notice was issued proposing to recover the wrongly availed cenvat credit along with interest and also for imposing penalty under Section 11AC of the Central Excise Act, 1944. After due process of law, the original authority confirmed the demand along with interest and appropriated the amount that has already been paid by the appellant. Equal penalty under Section 11AC of the Central Excise Act, 1944 was imposed. Aggrieved by the penalty imposed, the appellant filed appeal before the Commissioner (Appels) who upheld the same. Hence this appeal has been preferred by the appellant.

A Single Bench consisting of Sulekha Beevi CS, Judicial Member observed that “I am of the view that the appellant cannot be burdened with the guilt of suppression of facts with intent to evade payment of duty. The issue being interpretational in nature and as the department had collected all the details of availment of credit from the accounts maintained by the appellant, the penalty imposed in this regard is unwarranted. I hold that penalty imposed with regard to duty liability of the input tax credit availed in respect of electricity (Cogeneration plant) requires to be set aside which I hereby do so.”

To Read the full text of the Order CLICK HERE

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