Larsen & Toubro Ltd vs Commissioner Of Central Excise, ...

(Arising out of Order-in-Appeal No. 146/M-II/2012 dated 28.2.2012 passed by Commissioner of Central Excise (Appeals), Mumbai-II)

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 :

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?

======================================================

Larsen & Toubro Ltd. Appellant Vs. Commissioner of Central Excise, Mumbai-II Respondent

Appearance: Shri Kishore Ahuja, Sr. Manager, for appellant Shri Rakesh Goyal, Additional Commissioner (AR), for respondent

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

Date of Hearing: 9.1.2015 Date of Decision: 9.1.2015

ORDER NO

The brief facts of the case are that during 2007-08, the appellant availed cenvat credit of Rs.3,91,713/- on the capital goods. They also availed depreciation on the said amount under the Income-tax Law. The records of the appellant were audited and the above discrepancy was noticed. The appellant admitted the mistake and immediately on 30th January 2009 reversed the cenvat credit along with interest. A show cause notice was issued on 18.9.2009 proposing appropriation of the said amount of duty and interest and also proposing to impose penalty under Section 11AC of the Central Excise Act for the contravention of Rule 4(4) of the Cenvat Credit Rules, 2004. The case was adjudicated wherein the said amount relating to duty and interest was appropriated and a penalty of Rs.3,91,713/- under Section 11AC was also imposed. The appellant filed an appeal before the Commissioner (Appeals) regarding imposition of penalty. However, the Commissioner (Appeals) in the impugned order upheld the original order and dismissed the appeal of the appellant. Aggrieved by the said order, the appellant is before this Tribunal.

2. The appellant is only disputing the imposition of penalty and is not disputing their liability to pay duty and interest. The main contention is that theirs is a huge organisation and they have been availing credit on a large number of capital goods and due to human error in one case, the above mistake has happened. It was also submitted that after the said mistake was pointed out, they have taken adequate step to ensure that such a mistake does not happen in future. The main contention was that the penalty under Section 11AC can be imposed only when there is suppression of facts or contravention of rule with wilful intention to evade duty. It was contended that they have no wilful intention to evade duty nor they have suppressed any fact from the department and their unit is regularly audited and during the auditing of the unit itself they have reversed the cenvat credit along with interest. It was also submitted that during the entire period they had balance of many crores and there was no question of trying to avail any inadmissible credit of just Rs.3.91 lakhs.

3. The learned AR reiterated the points made in the impugned order and also stated that the appellant is a big organization and they have systems in place and they cannot afford to call it as a human error or ignorance of law.

4. I have carefully considered the rival submissions. Keeping in view the nature of dispute, the amount involved and the conduct of the appellant of reversing the credit along with interest immediately on being pointed out, I am satisfied that the ingredients of Section 11AC of the Central Excise Act to impose penalty are absent in the facts of the present case and, therefore, the penalty under Section 11AC is set aside and the appeal is allowed in above terms.

(Operative part pronounced in Court)

(P.K. Jain) Member (Technical)

tvu 1 4