Custom, Excise & Service Tax Tribunal
M/S. Tejas Networks Ltd vs Commissioner Of Central Excise, ... on 1 February, 2018
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, CHENNAI
Appeal No. E/569/2010
(Arising out of Order-in-Original No. 11/2010 (C) dated 30.8.2010 passed by the Commissioner of Central Excise, Puducherry)
M/s. Tejas Networks Ltd. Appellant
Vs.
Commissioner of Central Excise, Puducherry Respondent
Appearance Shri T.R. Ramesh and Shri S. Ganesh, Advocates for the Appellant Shri S. Govindarajan, AC (AC) for the Respondent CORAM Honble Ms. Sulekha Beevi C.S., Member (Judicial) Honble Shri B. Ravichandran, Member (Technical) Date of Hearing / Decision: 01.02.2018 Final Order No. 40298 / 2018 Per Ms. Sulekha Beevi, The appellants are engaged in the manufacture of multiplexers and parts thereof and are availing the facility of CENVAT credit on inputs and capital goods. On investigation, it was found that they were availing credit on inputs like PCB assembly cards, cable assembly and chassis etc. It was noticed that they availed input credit in MS Excel Worksheet; the value of each input invoice document was entered manually and the eligible credit was worked out from the assessable value by a formula incorporated in the column of Excel sheet. The procedures involved in the availment of credit have been ascertained and input details were obtained in softcopy. On detail verification, it revealed that the appellants have availed excess input credit. Show cause notice was issued proposing to recover the wrongly availed credit along with interest and also for imposing penalty. After due process of law, the original authority confirmed the demand and appropriated the amount already reversed by the appellant. The Commissioner also raised demand of interest and also imposed penalty. Aggrieved, the appellant is now before the Tribunal.
2. On behalf of the appellant, ld. counsel Shri T.R. Ramesh assisted by Shri S. Ganesh submitted that the appellant is not contesting the demand of credit and is confining the contest on the demand of interest and the equal penalty imposed. He submitted that the wrongly availed credit was reversed immediately before utilization on being pointed out by the department. It was explained by the ld. counsel that the appellant availed excess credit only due to the error in accounting. Prior to 1.4.2008, the appellant was using Tally software for their accounts. Thereafter, they migrated to SAP. There was some teething problem during the implementation of SAP. The employees had to manually enter the details in MS Excel Worksheet and the eligibility of credit was worked out by a formula which resulted in taking of excess credit. The appellant had sufficient balance in the CENVAT account during the given point of time. There was no intention to gain undue advantage and the same was reversed before utilization. He relied upon the decision of the jurisdictional High Court in the case of Commissioner of Central Excise Vs. Strategic Engineering (P) Ltd. 2014 (310) ELT 509 (Mad.). He pleaded that the demand of interest and penalties may be set aside.
3. The ld. AR Shri S.Govindarajan reiterated the findings in the impugned order.
4. Heard both sides.
5. The appellant is confining the contest to the demand of interest and the penalties imposed. It is not disputed that the appellant has reversed the credit before utilization. The jurisdictional High Court in the decision relied by the ld. counsel has analyzed the very same issue and held that the demand of interest and the penalties cannot sustain. The relevant portion of the judgment is as follows:-
8.?The entire argument put forth on the side of the appellant/Department is based upon the decision reported in 2012 (25) S.T.R. 184 (S.C.) = 2011 (265) E.L.T. 3 (S.C.) (Union of India v. Ind-Swift Laboratories Limited), wherein the Apex Court has given a finding to the effect that in Rule 14 of Cenvat Credit Rules, 2004 it has been clearly mentioned three stages, known as taken or utilization or erroneous refund. In the instant case, the first limb of Rule 14 of the said Rules is applicable and therefore, the assesses is bound to pay interest as well as penalty. The Honourable Apex Court has dealt with Rule 14 of the said Rules and subsequently on the basis of facts available in that case has given a finding to the effect that assessee therein is liable to pay interest as well as penalty.
9.?The learned counsel appearing for the respondent has contended that the decision reported in 2012 (25) S.T.R. 184 (S.C.) (Union of India v. Ind-Swift Laboratories Limited) has been elaborately dealt with in the decision reported in 2012 (26) S.T.R. 204 = 2012 (279) E.L.T. 209 (Kar.) (Commissioner of Central Excise & S.T. Bangalore v. Bill Forge Private Limited).
10.?In fact, this Court has perused the entire decision reported in 2012 (26) S.T.R. 204 (Karnataka) (Commissioner of Central Excise & S.T., Bangalore v. Bill Forge Private Limited) and ultimately found that mere taken of CENVAT credit facilities is not at all sufficient for claiming of interest as well as penalty.
11.?It is an admitted fact that Rule 14 of the Cenvat Credit Rules as been subsequently amended, wherein it has been clearly stated as taken and utilised. Therefore, it is quite clear that mere taking itself would not compel the assessee to pay interest as well as penalty. Further, as pointed out earlier, the subsequent amendment has given befitting answer to all doubts existed earlier. Since, the subsequent amendment has cleared all doubts existed earlier in respect of Rule 14 of the said Rules, it is needless to say that the argument advanced by the learned counsel appearing for the appellant/Department is erroneous, whereas the argument advanced on the side of the respondent is really having merit and the substantial questions of law settled in the present Civil Miscellaneous Appeal are not having substance and altogether the present Civil Miscellaneous Appeal deserves to be dismissed.
6. Following the above, we are of the view that the demand of interest and penalty cannot legally sustained. The impugned order is modified to the extent of setting aside the demand of interest and imposition of penalty without disturbing the demand of excess credit availed and the appropriation thereof. The appeal is allowed in the above terms.
(Dictated and pronounced in open court)
(B. RAVICHANDRAN) (SULEKHA BEEVI C.S.)
Member (Technical) Member (Judicial)
Rex
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