Hindustan Petroleum Corporation Ltd vs Commissioner Of Central Excise, Mumbai

[Arising out of Order-in- Appeal No. US/212/M-II/2012 dtd. 30/3/2012 passed by the Commissioner of Central Excise (Appeals), Mumbai-II]

For approval and signature:

Honble Mr Ramesh Nair, Member(Judicial)

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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 : CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

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

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

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Hindustan Petroleum Corporation Ltd. : Appellants

VS

Commissioner of Central Excise, Mumbai : Respondent

Appearance

Ms. Padmavati Patil, Advocate for the Appellants Shri. Rakesh Goyal, Addl. Commissioner(A.R.) for the Respondent

CORAM:

Honble Mr. Ramesh Nair, Member (Judicial)

Date of hearing: 25/2/2015 Date of decision: 25/2/2015

ORDER NO.

Per : Ramesh Nair

This appeal is directed against Order-in- Appeal No. US/212/M-II/2012 dtd. 30/3/2012 passed by the Commissioner of Central Excise (Appeals), Mumbai-II, wherein order-in-original No. MAD/ ADJ/04/Ch-II /2011-12 dated 31/5/2011 was upheld and appeal of the appellant was rejected. In the present case, the appellant has not challenged the demand of Cenvat Credit, however contested the imposition of penalty and interest. The fact of the case is that the appellant M/s. Hindustan Petroleum Corporation Ltd, public sector undertaking has availed the Cenvat Credit of Rs. 1,93,209/- for the period Nov 2009 to Oct 2010 on input which was short received/not received. In the show cause notice dated 26/11/2010 it was proposed to recover the wrongly availed Cenvat Credit to demand interest and to impose penalty. In the adjudication order dated 31/5/2011, the adjudicating authority has confirmed the demand of Rs. 1,93,209/-, appropriated the same against the payment already made, ordered of recovery of interest and imposed penalty of Rs. 1,93,209/- under Section 11AC. Aggrieved by the said order the appellant filed appeal before the Commissioner(Appeals), who upheld the order in-original and rejected the appeal, hence the appellant is before me.

2. Ms. Padmanvati Patil, Ld. Counsel for the appellant submits that appellant has taken credit on the basis of quantity mentioned in the invoices under bonafide mistake. However on pointing out the said mistake they have paid the amount, it is her submission that there is no malafide on their part in availment of such credit on short received/not received of the input. It is her submission that the show cause notice was issued within the normal period of one year and therefore proviso under Section 11A (1) is not invokable and consequently the penalty under Section 11AC should not have been imposed. She submits that being Government of India, public sector company there is no individuals benefit or interest involved in availment of wrong Cenvat credit, therefore the intent to evade payment of duty does not exist in the present case. As regard the demand of interest, she submits that since the credit balance in their PLA has always been more than demand of 1.93 lakhs, no interest is applicable.

3. On the other hand, Shri. Rakesh Goyal, Ld. Addl. Commissioner(A.R.) submits that in the show cause notice penalty under Section 11AC was proposed and same was confirmed in the adjudication order therefore the penalty under Section 11AC neither can be waived nor can be reduced as per the Supreme Court judgment in the case of Union of India Vs. Dharamendra Textile Processor[2008(231) E.L.T. 3(SC)]. As regard the interest it is his submission that interest is applicable right from the date of availment of Cenvat credit and not from the utilization of the credit. Therefore interest was correctly demanded in the present case.

4. I have carefully considered the submissions made by both the sides and perused the records.

5. It is fact that the Cenvat credit was availed during the period of Nov 2009 to Oct 2010 and the show cause notice issued within the period of one year on 26/11/2010. Thus the show cause notice was issued in the normal period of one year. The appellant has discharged the Cenvat credit demand admittedly and not contested the same. In the present case, the wrong credit was availed only due to the reason that quantity of input was short receipt, this discrepancy is usually occur in the industries where huge quantity of the input is handled therefore it can not be said that the appellant has intentionally and deliberately availed the wrong Cenvat Credt of Rs. 1,93,209/- with intent to evade payment of duty. Taking into consideration of the facts and circumstances of the case, I am of the view that any ingredient provided under the proviso to Section 11A(1) does not exist in the present case, therefore invocation of Section 11AC is not correct. Considering the above factual position, I am of the view that penalty under Section 11AC is not correct and legal. As regard the demand of interest, I agree with the Ld. A.R. that in case of wrong availment of Cenvat Credit, the period is reckoned form the date of availment of credit and not from the utilisation of the credit, therefore even though appellant maintained credit balance in their Cenvat/PLA account more than the demand, they cannot be absolved from the payment of interest on the confirmed demand. Therefore the demand of interest is sustainable. In view of my above discussion, I set aside the penalty imposed under Section 11AC and sustain the demand of interest. The appeal is partly allowed in above terms.

(Operative part pronounced in the court)

Ramesh Nair Member (Judicial)

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