The Bangalore Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), quashed a show cause notice (SCN) as there was no allegation of suppression or misstatement of facts or any other sub-clauses of section 11 A (4) of the Central Excise Act 1944 (CEA).
M/s. Nexteer Automotive India Pvt. Ltd, the appellants are manufacturers of excisable goods and the audit officers visited the premises of the appellant and audited their records for the period from January 2013 to December 2013. During the course of audit, the audit officers found that the appellant had availed irregular credit and the entire credit was reversed by the appellant. The audit report observed that “As the assessee had maintained sufficient balance in their cenvat account all along, the assessee was not charged with interest and penalty.”
The Commissioner (A) remanded the cases to the Original Authority after observing that since the appellant had sufficient credit balance available in the cenvat account and the fact that the credit so availed was never utilised, there appears to be no reason for imposing penalties as the credit was reversed on 30.01.2014 much before the issue of demand notice.
When the appeal came up for hearing today, the Chartered Accountant, Vinayaka Hegde, on behalf of the appellant submitted that the audit parties in their audit report had categorically mentioned that the assessee was not charged with interest and penalty since they had immediately reversed the credit and sufficient balance of credit was available in their records. Therefore, the show-cause notice was irregular and the adjudicating authorities should not have imposed penalty on them as is observed by the audit parties.
A Single Member Bench of R Bhagya Devi, Technical Member observed that “The present case is based only on the audit para and there is no iota of evidence to prove either suppression or misdeclaration of facts or contravention of provisions with intention to evade payment of duty. On the other hand, the appellant immediately reversed the credit as and when it was pointed out by the audit officers and the officers clearly noted that interest and penalty are not to be levied.”
The Bench concluded that in order to invoke Section 11A(4) and 11A(5) of the Central Excise Act, it is necessary to prove either fraud or collusion or wilful misstatement or suppression of facts or contravention of any of the provisions with intention to evade payment of duty these provisions are rightly applicable in the facts and circumstances of the present case as there is no allegation of suppression or misstatement of facts or any other sub-clauses of section 11 A(4) of the Central Excise Act.
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