M/S Makino India Pvt Ltd vs Commissioner Of Central Excise ...

E/2360/2011-SM Arising out of Order-in-Appeal No. 211/2010 dated 16/08/2010 passed by the Commissioner of Central Excise (Appeals-I), Bangalore]

For approval and signature:

HON'BLE SMT ARCHANA WADHWA, JUDICIAL MEMBER

1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? No 3 Whether Their Lordships wish to see the fair copy of the Order? Seen 4 Whether Order is to be circulated to the Departmental authorities? Yes

M/s MAKINO INDIA PVT LTD 11, EXPORT PROMOTION INDUSTRIAL PARK, WHITEFIELD BANGALORE 560 066 Appellant(s) Versus

Commissioner of Central Excise BANGALORE-I POST BOX NO 5400, CR BUILDINGS, BANGALORE - 560001. Respondent(s)

Appearance:

Mr. K. Krishnamurthy, Advocate For the Appellant Mr. N. Jagdish, A.R. For the Respondent

Date of Hearing: 09/07/2015 Date of Decision: 09/07/2015

CORAM :

HON'BLE SMT ARCHANA WADHWA, JUDICIAL MEMBER

Final Order No. 21530 / 2015

The challenge in the present appeal is only to imposition of penalty of Rs. 6,17,955/- imposed upon the appellant in terms of the provisions under Rule 15 of Cenvat Credit Rules 2004 read with Section 11AC of the Central Excise Act.

2. After hearing both the sides duly represented by Shri K. Krishnamurthy, learned advocate appearing for the appellant and Shri N. Jagdish, learned A.R. appearing for Revenue for some time, I find that the appellant is engaged in the manufacture of machines and their parts & accessories. In the year 2005, they imported certain capital goods on payment of duty of Rs. 12 lakhs approximately. They availed the credit of duty paid on the said machines to the extent of 50% in July 2005. However, as the said capital goods were not installed by them till December 2005, they reversed the said credit suo moto. Subsequently, in April 2006, they availed the balance 50% of the credit to the extent of Rs. 6,17,955/-.

3. Even thereafter, the said machines were not installed and used by the appellant. The same were subsequently transferred to their own unit located at Gurgaon engaged in the manufacture of identical item. As the appellant did not reverse the availed credit at the time of transfer of the said goods to their Gurgaon unit, an objection was raised by their jurisdictional Central Excise authorities and the appellant reversed the credit along with interest.

4. In the above background, proceedings were initiated against them for imposition of penalty which stands adjudicated by the lower authorities and upheld by the Commissioner (Appeals).

5. The contention of learned advocate appearing for the appellant is that there is no mala fide on their part inasmuch as the credit availed by them was not reversed on account of being ignored about law. He fairly agrees that though ignorance of law is no excuse but submits that for imposition of penalty, a mala fide to be on the part of the assessee. He further submits that the entire situation is revenue neutral inasmuch as their Gurgaon unit is also excisable unit and is paying excise duty out of PLA. The credit required to be reversed by them at the time of transfer of the goods was available as credit to their Gurgaon unit who could have utilized the same for payment of duty on their final product. Inasmuch as the entire situation is revenue neutral, the same reflected on absence of any mala fide on the part of the assessee. For the above purpose, learned advocate relied upon the Larger Bench decision of the Tribunal in the case of Jay Yuhshin Ltd. vs. Commissioner of Central Excise, New Delhi [2000 (110) E.L.T. 718 [Tri.  L.B.)] as also recent decision of the Tribunal in the case of Jain Irrigation Systems Vs. Commissioner of Central Excise, Nasik [Order No. A/1334/15/STB dated 26/05/2015.

6. According to the Revenue, the appellants have not shown their bona fide by reversing the Cenvat credit at the time of transfer of the capital goods to their sister concern. This fact itself is sufficient for imposition of penalty.

7. After careful consideration of the submissions made by both the sides, I find that admittedly, penal provisions involve an element of mens rea. The duty required to be paid by the appellant, by reversing the Cenvat credit was available as credit to their own unit located in Gurgaon, to whom the capital goods were transferred. Gurgaon unit is also an excisable unit and could have utilized the said credit for payment of duty on their final product. As such, I am of the view that the entire situation being a revenue neutral situation vis-`-vis the same assessee, there could be no motive on the part of the appellant for not reversing the credit. In the absence of any mala fide motive, I am of the view that the imposition of penalty is not justified. Accordingly, while confirming the demand along with interest, I set aside the penalty imposed on the appellant. The appeal is disposed of in the above manner.

(Pronounced in open court)

(ARCHANA WADHWA) JUDICIAL MEMBER /vc/