Corporate Ispat Alloys Limited Vs. Commissioner of Central Excise - Court Judgment

Excerpt:
1. this appeal is directed against the order of the commissioner (appeal) no. 06/bol/2004 dated 30.01.2004. the commissioner (appeal) by the impugned order has rejected the appeal filed by the appellant and hence this appeal. the facts of the case in brief are that scrutiny of the records of the appellants by the visiting officers of the anti-evasion unit revealed the case of availing of excess amount of cenvat credit on capital goods excluding the permitted limit of 50 per cent as prescribed under rule 57ac(2)(a) of erstwhile central excise rules, 1944 and utilization of the excess amount of rs. 1,84,254.50 (one lakh eithty four thousand two hundred fifty four and fifty paise only) towards payment of central excise duty. the credit so ustilised resulted in the debit balance clearance for an amount of rs. 1,28,924.70 (one lakh twenty eight thousand nine hundred twenty four and seventy paise only). the lower authority confirmed the demand with imposition of penalty and charging the interest. the commissioner (appeal) has upheld the order of the lower authority and rejected the appeal filed by the appellant. in their grounds of appeal it has been submitted by the appellant that wrongful availment of excess credit occurred due to inadvertence of their staff having detected the fact that they have debited the amount of rs. 1,84,254.50 (one lakh eithty four thousand two hundred fifty four and fifty paise only) on 24.7.2000 along with appropriate amount of interest leviable thereon till the date of utilization of the same. as the appellant have already paid the duty and interest, no penalty was warranted. there was no suppression of fact or willful misstatement and the mistake was a bonafide one for which no penalty was imposed.2. heard shri b.n. chattopadhyay, consultant for the appellant. he submits that they have already paid the duty as well as the interest.he has relied upon a larger bench decision in commissioner of central excise, delhi-iii v. machine montell (i) ltd. where it has been held by the tribunal that payment of duty before issue of show cause notice, no penalty can be imposed under section 11ac of the central excise act, 1944 and interest demanded under section 11ab ibid.he submits that the hon'ble apex court in the case of rashtriya ispat nigam ltd on 07.05.2003 has dismissed the appeal filed by the revenue against the order of the tribunal. the appellate tribunal its order has held that the penalty is not imposable under section 11ac as well as under rule 173q of the erstwhile central excise rules, 1944 when the duty is deposited is deposited before issue of show cause notice.3. heard shri y.s. lone, id. jdr who reiterates the order of the commissioner (appeal) 4. after hearing both the sides i find that the hon'ble apex court has held in the judgment referred to above that no penalty is leviable under section 11ac or rule 173q of the central excise rules if the duty is paid before the issue of show cause notice. it is a fact that the appellant has paid the entire duty amount before the issue of show cause notice. they have also paid the interest leviable thereon.relying upon the above ratio held by the hon'ble supreme court and the larger bench decision referred to above i allow the appeal filed by the appellant. in view of above, i hold that no penalty is leviable on the appellant. the order of the commissioner (appeal) modified to the above extent.

Judgment:
1. This appeal is directed against the order of the Commissioner (Appeal) No. 06/Bol/2004 dated 30.01.2004. The Commissioner (Appeal) by the impugned order has rejected the appeal filed by the Appellant and hence this appeal. The facts of the case in brief are that scrutiny of the records of the appellants by the visiting officers of the Anti-evasion unit revealed the case of availing of excess amount of CENVAT Credit on capital goods excluding the permitted limit of 50 per cent as prescribed under Rule 57AC(2)(a) of erstwhile Central Excise Rules, 1944 and utilization of the excess amount of Rs. 1,84,254.50 (One lakh Eithty Four thousand Two hundred Fifty Four and Fifty paise only) towards payment of Central Excise duty. The credit so ustilised resulted in the debit balance clearance for an amount of Rs. 1,28,924.70 (One lakh Twenty Eight Thousand Nine Hundred Twenty Four and Seventy paise only). The lower authority confirmed the demand with imposition of penalty and charging the interest. The Commissioner (Appeal) has upheld the order of the lower authority and rejected the appeal filed by the Appellant. In their grounds of appeal it has been submitted by the Appellant that wrongful availment of excess credit occurred due to inadvertence of their staff having detected the fact that they have debited the amount of Rs. 1,84,254.50 (One lakh Eithty Four thousand Two hundred Fifty Four and Fifty paise only) on 24.7.2000 along with appropriate amount of interest leviable thereon till the date of utilization of the same. As the appellant have already paid the duty and interest, no penalty was warranted. There was no suppression of fact or willful misstatement and the mistake was a bonafide one for which no penalty was imposed.

2. Heard Shri B.N. Chattopadhyay, Consultant for the Appellant. He submits that they have already paid the duty as well as the interest.

He has relied upon a Larger Bench decision in Commissioner of Central Excise, Delhi-III v. Machine Montell (I) Ltd. where it has been held by the Tribunal that payment of duty before issue of show cause notice, no penalty can be imposed under Section 11AC of the Central Excise Act, 1944 and interest demanded under Section 11AB ibid.

He submits that the Hon'ble Apex Court in the case of Rashtriya Ispat Nigam Ltd on 07.05.2003 has dismissed the appeal filed by the Revenue against the order of the Tribunal. The Appellate Tribunal its order has held that the penalty is not imposable under Section 11AC as well as under Rule 173Q of the erstwhile Central Excise Rules, 1944 when the duty is deposited is deposited before issue of show cause notice.

3. Heard Shri Y.S. Lone, Id. JDR who reiterates the order of the Commissioner (Appeal) 4. After hearing both the sides I find that the Hon'ble Apex Court has held in the judgment referred to above that no penalty is leviable under Section 11AC or Rule 173Q of the Central Excise Rules if the duty is paid before the issue of show cause notice. It is a fact that the appellant has paid the entire duty amount before the issue of show cause notice. They have also paid the interest leviable thereon.

Relying upon the above ratio held by the Hon'ble Supreme Court and the Larger Bench decision referred to above I allow the appeal filed by the Appellant. In view of above, I hold that no penalty is leviable on the appellant. The order of the Commissioner (Appeal) modified to the above extent.