Custom, Excise & Service Tax Tribunal
M/S. Lloyd Electric & Engineering Ltd vs C.C.E. & S.T. Jaipur-I on 21 November, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX
APPELLATE TRIBUNAL, NEW DELHI
PRINCIPAL BENCH, COURT NO. IV
Appeal No. E/1306/2010-EX(SM)
[Arising out of Order-in-Appeal No. 121(DK)CE/JPR-I/2010 dated 26.02.2010, by the Commissioner of Customs, Central Excise & Service Tax (Appeals), Jaipur].
For approval and signature:
Hon'ble Ms. Archana Wadhwa, Member (Judicial)
1
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No
2
Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3
Whether Their Lordships wish to see the fair copy of the Order?
Seen
4
Whether Order is to be circulated to the Departmental authorities?
Yes
M/s. Lloyd Electric & Engineering Ltd. .Applicants
Vs.
C.C.E. & S.T. Jaipur-I .Respondent
Appearance:
Ms. Sukriti Das, Advocate for the Applicants Shri Dharam Singh, DR for the Respondent CORAM:
Hon'ble Ms. Archana Wadhwa, Member (Judicial) Date of Hearing: 05.09.2016 Date of Pronouncement: 21.11.2016 FINAL ORDER NO. 55148/2016-EX(SM) Per Archana Wadhwa:
As per facts on record the appellant is engaged in the manufacture of air conditioners and parts thereof falling under chapter 84 of the Schedule to the Central Excise Tariff Act 1985 and were availing the benefit of Cenvat Credit on duty paid on various inputs.
2. Their factory was visited by the officers of Preventive Central Excise Division on 20.09.2006 who conducted various verifications and scrutinized the records. It was found that the appellant had availed Cenvat Credit of duty on the basis of the documents which were in the name of their other unit situated in Kalamb in Himachal Pradesh. Further, in respect of one invoice the credit was taken twice and in respect of one Bill of Entry, the credit was availed before the receipt of the goods in as much as they were still lying in warehouse pending ex-bond clearance.
3. The appellants authorized representative Shri Jindal in his statement recorded on the subject accepted the above excess availment of credit on the basis of the documents related to their Himachal Pradesh unit, which were sent to them inadvertently by their Head Office and as such the credit was availed by mistake. Similarly in respect of double availment of credit in respect of one invoice, he clarified that the same was a mistake on the part of the employee responsible for maintaining the Cenvat Credit account. The availment of credit against Bill of Entry when the goods were still lying in the warehouse was due to oversight. The total Cenvat Credit of Rs.21,75,684/- was debited by the appellant on 20.09.2006 itself.
4. Based upon the above, proceedings were initiated against the appellant by way of issuance of the show cause notice dated 30.01.2008 proposing to confirm the debit entry made by the appellant in their RG-23 Part II along with confirmation of interest and imposition of penalty under Rule 15(1) of the Cenvat Credit Rules read with section 11AC of the Central Excise Act.
5. On adjudication the Original Adjudicating Authority confirmed the denial of the Cenvat Credit and imposed penalty of identical amount under Rule 15 (2) of Cenvat Credit Rules read with Section 11AC. The said order of the original adjudicating authority was upheld by Commissioner (A). Hence the present appeal by the assessee.
6. Ld. Advocate appearing for the appellant submits that they are not contesting the reversal of the Cenvat Credit and the only contest is to imposition of penalty. Clarifying further, he submits that the credit in respect of invoice meant for their unit located at Kalamb was availed by mistake in as much as their Head Office sent the said invoice to their unit located at Bhiwadi and the person responsible for maintain the records took the Cenvat Credit without noticing that the invoice were not in their units name. He submits that in any case the credit was available to their Kalamb unit. Similarly the fact of availment of credit two times in respect of the same invoice was a clerical mistake. Further, the availment of credit in respect of Bill of entry, prior to receipt of the goods is also a bonafide mistake of the assessee in as much as admittedly the credit was available to them after the receipt of the goods. He further clarified throughout the period in question they were having overflowing credit and as such there was no malafide on their part to avail excess credit. The credit so availed was also not utilized during the relevant period and was immediately reversed when pointed out by the officers at the time of their visit to the factory. Such reversal of credit without utilization and any protest by the appellant should have been taken into consideration, resulting in conclusion of the proceedings, thus requiring no issuance of the show cause notice in terms of section 73 (3) of the Finance Act. In such a scenario the imposition of penalty upon the appellant is neither warranted nor justified. Accordingly he prays for setting aside the same.
7. After hearing the Ld. DR and after going through the impugned order and appreciating the submissions made by the Ld. Advocate, I find that the only contest in the present appeal is to imposition of penalty. Admittedly, the entire credit irregularly availed by the appellant was reversed by them prior to the issuance of the show cause notice. As such I agree with the Ld. Advocate that the same should have been considered as finality of the proceedings and no show cause notice was required to be issued in terms of section 73(3) of the Finance Act.
8. In any case, I find that the credit wrongly availed by the assessee on the basis of the invoice, in the name of their Kalamb unit was otherwise available to their Kalamb unit. To err is human and in as much as the error is on the part of the employee responsible for making entries in RG-23 (a) part II, who had recently joined, I conclude that there was no malafide intention on the part of the assessee so as to impose penalty upon them.
9. Similarly in respect of availment of credit on the basis of Bill of Entry the same was available to them on receipt of the goods. As such it is only a question of time of availament of credit and such pre mature availment has not benefitted the assessee in as much as the credit availed was not put to use on account of already overflowing credit available with the assessee. This act of the appellant cannot be held to be a malafide intention so as to invoke the penal provisions against them.
10. In view of the foregoing declaration, I find no justifiable reasons to impose penalty on the appellant. Accordingly, the same is set aside and appeal is allowed in above terms. As there is no contest to duty confirmation the said portion of the impugned order is upheld.
[Pronounced in the open Court on 21.11.2016] (Archana Wadhwa) Member (Judicial) Bhanu 3 E/1306/2010-EX(SM)