M/S. Sri Kumaran Alloys (P) Ltd vs Commissioner Of Central Excise, Salem
- CitationAppeal No.124/2014-CE
Ratio decidendi
The rule this decision rests on
Where a manufacturer is a small-scale unit that has never availed Cenvat credit, a capital goods credit recorded in the RG-23A register and left unutilised remains a mere book entry, and interest cannot be levied on such unutilised credit; the Supreme Court's decision in Bombay Dyeing & Manufacturing Co. Ltd. is taken to preclude interest in that situation, and the statutory amendment by the Finance Act, 2012 confirms that no interest is leviable on unutilised credit. Recording a capital goods credit in the RG-23A register contrary to law is itself a contravention warranting penalty, even where no credit has been utilised and no duty has been evaded, and the quantum of penalty may be fixed at a level the Tribunal considers serves the interest of justice.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
[Arising out of Orders-in-Appeal No.124/2014-CE, dated 23.04.2014 passed by the Commissioner of Central Excise (Appeals), Salem]
M/s. SRI KUMARAN ALLOYS (P) LTD. APPELLANT
Versus
COMMISSIONER OF CENTRAL EXCISE, SALEM RESPONDENT
Appearance:
For the Appellant Shri Seeni Kanappan Adv.
For the Respondent Shri B. Balamurugan AC (AR)
CORAM:
Honble Shri D.N. Panda, Judicial Member
Date of hearing/decision 06-02-2015
FINAL ORDER NO. 40126 / 2015
Learned counsel says that it is a SSI and it has not at all availed any Cenvat credit, although the capital goods credit was recorded in the RG-23 A Register. He further submits that mere recording of the transaction without utilisation thereof shall not penalize the appellant nor shall warrant any deposit of interest. However, the appellant has faced penalty of Rs.8,00,000/-.
2. Revenue supports the adjudication.
3. Heard both sides and perused the records.
4. Both sides also agree that the appellant is a SSI and has not availed Cenvat credit. Therefore, the capital goods credit only remain as entry in the books. Levying of the interest on the unutilized Cenvat credit shall be contrary to the decision of the Supreme Court in the case of Commissioner of Central Excise, Mumbai-I Vs Bombay Dyeing & Manufacturing Co. Ltd. reported in 2007 (215) E.L.T. 3 (S.C.). Considering such practical difficulty, the Finance Act, 2012 enacted provision for no levy of interest on unutilized credit. Therefore, there shall not be any levy of interest on the appellant although capital goods credit was recorded in the RG-23A register.
5. The appellant no doubt recorded the credit in record contravening law. Therefore, imposition of penalty of Rs.1,00,000/- (Rupees One Lakh only) shall serve the interest of justice.
6. Appeal is thus allowed directing the appellant to deposit Rs.1,00,000/- (Rupees One Lakh only) within four weeks from today and produce challan before the Adjudicating authority by 20th March, 2015 to satisfy him carrying out of the terms of this order. If the appellant fails to make such deposit and comply to this order, this shall stand vacated and both the stay application and appeal stand dismissed.
7. In the result both the stay application and appeal are disposed on above terms. (Dictated and pronounced in open court)
(D.N. PANDA) JUDICIAL MEMBER ksr 07-02-2015
DRAFT Remarks
I II III
Date of dictation 06.02.2015
Draft Order - Date of typing 06.02.2015
Fair Order Typing 07.02.2015
Date of number and date of dispatch
4 E/S/41977/2014 and E/41693/2014
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