Chartered Accountant
Bookmark and Share
click here to subscribe our newsletter
 
 
Corporate News *   CBIC issues draft rules for Customs valuation *  Top Headlines: Threshold for Benami deals, green bond investors, and more *  Govt aims 1-hour clearance for goods at all ports *  Exporters Allowed To Use RoDTEP, RoSCTL Scrips To Pay Customs Duty, Transfer Them; Rules Amended *  Millions of labourers to be affected by brick producers’ strike over hike in GST, coal rates *  Inauguration of ‘kendriya GST parisar’ *  Transporter can seek Release of Conveyance alone, not Goods under GST Act: Madras HC *  GST: Quoting of DIN Mandatory for Responding to Notice, Govt Modifies Portal *  Firms can soon file claims for GST credits of ?400 cr *  CBIC issues modalities for filing transitional credit under GST. *  Mumbai: Man creates 36 fake GST firms, arrested for input tax credit fraud of Rs 23 cr *  Report to restructure Commerce Ministry under study; idea is to set up trade promotion body: Goyal *  Firms can soon file claims for GST credits of ?400 cr *  Gambling Alert! Govt May Levy Up To 28% GST; UP, Bengal Back Move *  EPFO backs raising retirement age to ease pressure on pension funds *  India Moving Up Power Scale, Set to Become Third Largest Economy By 2030 *  Airfares Get Expensive: What Changes for Flyers From Today? *  IRCTC Latest News: Passengers to Pay More For Cancelling Confirmed Rail Tickets Soon. *  IBC prevails over Customs Act, says Supreme Court. *  As GST enters sixth year, a time for evaluation and reassessment *  There’s GST on daily essentials as Centre needs money to buy MLAs: Arvind Kejriwal *  Now, GST on cancellation of confirmed train tickets, hotel bookings *  GST kitty for top States could rise 20% in FY23, says Crisil *  French customs officials seize another cargo vessel over Russia sanctions *  TradeLens builds on Asia momentum with Pakistan Customs deal *  Hike tax on tobacco, reduce affordability & increase revenue: Civil society organizations to GST council *  Bihar: ?10 crore tax evasion on tobacco products detected in raids *  Centre failed on GST, COVID; would it be anti-national? Rajan on Infosys row *  Service Tax not Chargeable on Income Tax TDS portion paid by recipient: CESTAT grants relief to TVS *  Foreign portfolio investors make net investment of Rs 7575cr in Sep so far
Subject News *  Run-up to Budget: Monetary threshold for GST offences may rise to Rs 25 cr *   GST (Tax) E-invoice Must For Businesses With Over Rs 5 Crore Annual Turnover *   Both Central GST and excise duty can be imposed on tobacco, rules Karnataka high court *   CBIC Issues Clarification On Extended Timelines For GST Compliance *   CBIC Issues Clarification On Extended Timelines For GST Compliance *  Budget 2023- 9.6 crore gas connections *  GST: Tamil Nadu Issues Instructions for Assessment and Adjudication Proceedings *  GST: CBIC Extends Last Date for filing of ITC *  GST collection in September surpasses Rs 1.4 lakh crore for straight seventh time *  Dollar smuggling case: Customs chargesheet names M Sivasankar as key conspirator. *  Hike in GST rates fuels inflation *  Assam: CBI arrests GST commissioner in Guwahati *  GST fraud worth ?824cr by 15 insurance Cos detected *  India proposes 15% customs duties on 22 items imported from UK *  Decriminalising certain offences under GST on cards *  Surge in GST collections more due to higher inflation: India Ratings *  MNRE Notifies BCD and Hike in GST Rates as ‘Change in Law’ Events But With a Condition | Mercom India *   Solar projects awarded before customs duty change allowed cost pass-through *  Rajasthan High Court Dismisses Writ Petitions Challenging Levy Of GST On Royalty *   GST revenue in September likely at Rs 1.45 lakh crore *  Govt working on decriminalising certain offences under GST, lower compounding charge *  Building an institution like GST Council takes time, trashing is easy: Sitharaman *  GST collections in Sept may touch ?1.5 lakh crore *  KTR asks Centre to withdraw GST on handlooms *  After Gameskraft, More Online Gaming Startups To Receive GST Tax Claims *  Madras HC: AAR Application Filed Under VAT Does Not Survive After GST Enactment *  Threshold for criminal offences under GST law may be raised *  Bengaluru: Gaming company faces biggest GST notice of Rs 21,000 crore *  CBIC clarifies Classification of Cranes for GST, Customs Duty *  Customs seize gold hidden in bicycle in Kerala airport  

Comments

Print   |    |  Comment

PJ/CASE LAW/2015-16/2608

Whether penalty sustainable if wrongly availed credit paid along with interest before SCN?

Case:-COMMR. OF C. EX., CUS. & S.T., BELGAUM VERSUS ELVEETY INDUSTRIES PVT. LTD.
 
Citation:- 2014 (306) E.L.T. 174 (Kar.)

Brief Facts:-The material facts leading up to this appeal are as follows :
The respondent-assessee are registered with the Central Excise and are engaged in the manufacture of Biscuits falling under CETH 19059020 of the Central Excise Tariff Act, 1985 and are availing the benefit of Cenvat credit. Since it was found that the assessee had contravened the provisions of sub-rule 2(a) of Rule 4 of Cenvat Credit Rules, 2004 and had availed 100% of Cenvat credit in respect of capital goods received into their factory in the same financial year. Availing of benefit of credit of Rs. 7,082/- of Cenvat (BED) and Rs. 143/- of Education Cess as excess credit was found to be excess credit. When the same was pointed out to the assessee, the said mistake was rectified by readjusting the credit. However, proceedings were initiated by the Original Authority by issuing notice and the Original Authority passed the order on 24-7-2006 holding that the assessee had wrongly availed the Cenvat credit facility in a sum of Rs. 7,082/- towards duty and Rs. 143/- towards educational cess and also interest of Rs. 329/- and also imposed penalty of Rs. 10,000/- on the respondent for violation of the rules.
Being aggrieved by the said order passed by the Original Authority, the assessee preferred Appeal No. 313/2006 on the file of Commissioner of Central Excise (Appeals), Mangalore and the Appellate Authority by order dated 3-11-2006 held that the appellant-assessee had availed capital goods credit by posting 100% of such credit available in the first financial year itself instead of 50% as required in terms of sub-rule (2A) of Rule 2(4), and the appellant however, reversed the excess credit taken along with interest before issue of Show Cause Notice and when the duty and interest have been paid even before the issue of show cause of notice there was no need to impose a penalty and accordingly set aside the order passed by the Original Authority and allowed the appeal. Being aggrieved by the said order the Revenue preferred an appeal in Appeal No. Excise/55/2007 before the CESTAT and the Tribunal by order dated 19-3-2008 dismissed the appeal confirming the order passed by the Appellate Authority. Being aggrieved by the order passed by the Tribunal, the instant appeal is preferred by the Revenue.

Appellant’s Contentions:-Learned counsel appearing for the appellant submitted that the fact that there was wrongful availment of the Cenvat credit, is not disputed. However, mere readjustment would not by itself absolve the assessee of any violation and therefore the order passed by the Original Authority may be restored by setting aside the order passed by the Appellate Authority and the Tribunal.
 
Respondent’s Contentions:- No one appearing on behalf of respondents.

Reasoning of Judgment:- The High Court has given careful consideration to the contention of the learned counsel appearing for the appellant. The material on record would clearly show that the assessee had mistakenly availed 100% credit instead of 50% and when the same was brought to the notice of the assessee, the same was readjusted and interest was also paid on the wrongful credit. However, thereafter the proceedings have been initiated and original order has been passed imposing penalty and demand duty which was of Rs. 7,800/- and imposing penalty of Rs. 10,000/-. There is concurrent finding by the Appellate Authority and the Appellate Tribunal that the said finding of the Original Authority cannot be sustained and the same is set aside on the ground that as on the date of initiation of proceedings, the violation which was rectified by the assessee by readjusting the credit and also paying interest and therefore no further proceedings can be initiated and the said finding is justified having regard to the facts of the case.
In view of the above, the High Court held that, on the facts of the case, the appeal do not give rise to any substantial question of law. Accordingly the appeal is dismissed as devoid of merits.

Decision:- Appeal rejected.

Comment:- The analogy in the case is that if the assessee has taken 100% credit in the same financial year mistakenly which leads to the contravention of Sec 4(2A) of Cenvat Credit Rules,2004 and when the mistake was pointed out to the assessee it was rectified i.e. excess credit availed was readjusted and interest was also paid on such excess credit .Therefore, no further proceedings can be initiated on the assessee. Consequently, the appeal filed by the revenue for imposition of penalty was rejected as devoid of merits.

Prepared By-Neelam Jain

Department News


Query

 
PRADEEP JAIN, F.C.A.

Head Office : -

Address :
"SUGYAN", H - 29, SHASTRI NAGAR, JODHPUR (RAJ.) - 342003

Phone No. :
0291 - 2439496, 0291 - 3258496

Mobile No. :
09314722236

Fax No. :0291 - 2439496


Branch Office : -

Address:
1008, 10th FLOOR, SUKH SAGAR COMPLEX,
NEAR FORTUNE LANDMARK HOTEL, USMANPURA,
ASHRAM ROAD, AHMEDABAD-380013

Phone No. :
079-32999496, 27560043

Mobile No. :
093777659496, 09377649496

E-mail :pradeep@capradeepjain.com