Bajaj Auto Ltd vs Commissioner Of Central Excise

(Arising out Order-in-Appeal No. SB/57/LTU/MUM/2010 dated 29.03.2010 passed by the Commissioner of Central Excise (Appeals), Mumbai)

For approval and signature: Honble Mr. P.K. Jain, Member (Technical)

1. Whether Press Reporters may be allowed to see No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether Their Lordships wish to see the fair copy Yes of the Order?

4. Whether Order is to be circulated to the Departmental Yes authorities?

Bajaj Auto Ltd. Appellant

Vs.

Commissioner of Central Excise, Respondent

Appearance:

Shri M.P. Joshi, Advocate for the appellant Shri V.K. Shastri, AC (AR) for the respondent

CORAM:

Honble Mr. P.K. Jain, Member (Technical)

Date of hearing : 13.02.2015 Date of decision : 13.02.2015

ORDER No: ..

The brief facts of the case are that the applicant availed Cenvat credit on certain dies. However, these dies were not used at all and were lying in the factory of the appellant. After few years, it was decided to scrap the said dies and the dies were sold by the appellant as scrap. During the audit, it was pointed out since the dies have been cleared as such, they are required to reverse the amount equal to the Cenvat credit availed as per Rule 3(4) of CENVAT Credit Rules, 2002. On being pointed out, the applicant reversed the credit taken. Now the dispute is relating to interest and penalty.

2. Ld. counsel for the appellant submitted that there was no intention to evade any duty and since dies were never used, and were not to be used due to certain decision, they had scrapped and paid the duty as scrap. On being pointed out by the audit they immediately reversed the Cenvat credit availed by them. Under the circumstances, ingredients of Section 11AC are not present and hence no penalty can be imposed. He further submitted that interest can also not be demanded as per Rule 3(4) they are required to reverse the amount equal to the Cenvat credit taken and there is no provision for charging interest on the said amount.

3. Ld. AR reiterates the impugned order and also quoted the Hon'ble Supreme Court judgment in the case of Indo-Swift Laboratories Ltd. 2011 (265) ELT 3 (SC) relating to interest and also this Tribunals decision in the case of MM Forgings 2013 (294) ELT 145 (T-Chennai).

4. Considered the submission made by both sides.

5. It is seen that the applicant was expected to reverse the Cenvat credit at the time of clearance. The word amount used in Rule 3(4) is with reference to duty alone. In fact, whenever such an amount is reversed the same can also be used as credit by the recipient of such goods. In these circumstances, I do not find any force in the appellants contention that they are not liable to pay the interest. I accordingly, order that the appellant will pay the interest from the date of clearance till the date of payment of Cenvat credit. As far as the penalty under Section 11AC is concerned, I agree with the appellants contention that the ingredient as prescribed under Section 11AC for imposition of penalty are not present in the present case and accordingly, penalty under Section 11AC is set aside.

6. Appeal is disposed of in the above terms.

(Operative part pronounced in Court)

(P.K. Jain) Member (Technical)

//SR 1 2 2