No penalty u/s 15(2) of Cenvat Credit Rules in absence of evidence to establish the intentional Availment of Irregular CENVAT Credit: CESTAT [Read Order]

The Kolkata Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that no penalty under section 15(2) of Cenvat Credit Rules in absence of evidence to establish the intentional availment of irregular CENVAT Credit.

M/s. Kohinoor Steel Private Limited, the assessee were entitled to take 50% of the credit of the capital goods in the year of its receipt and the remaining 50% credit was to be taken in the next financial year.

The assessee had rightly taken 50% of the credit of the capital goods in the first year of its receipt and availed 50% of the remaining credit in the subsequent year. The assessee has again availed 50% of the credit in the same year. It is observed that the assessee has reversed the excess credit availed along with interest before the issue of the Show Cause Notice by the Department. 

The Department alleged that the assessee has intentionally taken the credit and was held to be liable for penalty under Section 15(2) of the CENVAT Credit Rules read with Section 11AC of the Central Excise Act, 1944. The Commissioner while adjudicating the case dropped the penalty under Section 15(2) of the CENVAT Credit Rules.

The provisions of Section 11AC of the Act are attracted in the event of establishing fraud, collusion or suppression of facts or making any wilful misstatement with an intent to evade payment of duty.

The two bench members comprising of Shri P K Choudhary, Member(Judicial) and Shri K Anpazhakan, Member(Technical) observed that the assessee has rightly availed the 50% of the capital goods Credit in the first year of its receipt and the remaining 50% of the credit in the subsequent year. The excess credit availed for the second time has been reversed along with interest by the assessee before the issue of the Show Cause Notice.

Since there is no intention to avail of the irregular credit, the proposed penalty under Rule 15(2) of the CENVAT Credit Rules is not valid and sustainable. The CESTAT held that there is no evidence on record to establish that the Appellant has intentionally availed the irregular credit. The Tribunal upheld the findings of the Adjudicating Authority and held that no penalty was imposable

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