Vsl Steels Ltd vs Commissioner Of Central Excise, ...

[Arising out of Order-in-Appeal No.263/2010-CE dated 28/09/2010 passed by the Commissioner of Central Excise (Appeals-II), 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

VSL STEELS LTD PARAMENAHALLI VILLAGE, HIRIYUR TALUK, CHITRADURGA DIST, KARNATAKA Appellant(s)

Versus

Commissioner of Central Excise, Service Tax And Customs BANGALORE-II PB 5400 CR BUIDING, QUEENS ROAD, BANGALORE  560 001. KARNATAKA Respondent(s)

Appearance:

Mr. CHIDANANDA URS BG ADV #520, 7TH MAIN, 13TH CROSS, RMV II STAGE, DOLLARS COLONY, BANGALORE-560 094 For the Appellant

Mr. Ilangovan, AR For the Respondent

Date of Hearing: 27/05/2015

Date of Decision: 27/05/2015

CORAM:

HON'BLE SMT. ARCHANA WADHWA, JUDICIAL MEMBER

Final Order No. 21198 / 2015

Per : ARCHANA WADHWA

The appellant, who is engaged in the manufacture of pig iron was availing the benefit of CENVAT credit of duty paid on the inputs received by him regularly. In terms of the provisions of Rule 3(4) of CENVAT Credit Rules, the appellant was obliged to use the credit availed in any month only to the extent available to him on the last day of that particular month. This means that the credit earned in the subsequent months cannot be used for payment of duty for the previous month.

2. However, the appellant for the period June 2007 to April 2008 (leaving a few months in-between), wrongly utilized the credit for payment of duty of their final products, to some extent. The total quantum of mis-utilization is to the extent of Rs.6,49,994/-. On the said basis, proceedings were initiated against them for confirmation of demand of duty to that extent along with interest as also for imposition of penalty.

3. The said proceedings were adjudicated by the original adjudicating authority who confirmed the demand along with interest and also imposed 100% penalty in terms of Rule 15 of CENVAT Credit Rule read with Section 11AC of the Excise Act. The said order was appealed before Commissioner (A), who upheld the same.

Hence the present appeal.

4. The appellants contention is that such wrong utilization of credit in contravention of the provisions of the said Rule 3(4) was unintentional inasmuch as they had a new accountant clerk, who was not aware of the provisions and accordingly mis-utilized the credit. It is the contention of the learned CA that during all these months they were having sufficient balance in their PLA and were in a position to use the PLA amount. In any case, the credit so availed was admittedly available to them during the succeeding months and by using it in the preceding month, they have not made the said credit available to them for the subsequent month. At the most it will attract some interest liability, which the appellant had discharged to the extent of Rs.7,176/-. In this scenario, he prays that penalty should not be imposed upon them. He also relies upon the Tribunals decision in the case of Laurel Wires Ltd. vs. CCE, Nasik: 2007 (213) E.L.T. 697 (Tri.-Mum.) as also some other decisions of the Tribunal.

5. Countering the arguments of learned advocate, learned DR Shri Ilangovan submits that the fault in such mis-utilisation of credit was not limited to one month but was spread over a period of one year. In these circumstances, the appellants plea that their clerk was new and was not aware of the law cannot be appreciated. Such regular mis-utilization, according to the learned AR, invites penal provisions. As such he prays for upholding the impugned order.

6. After appreciating the submissions made by both the sides, I find that the appellants have been utilizing excess credit for a period spread from June 2007 to April 2008 and such mis-utilization was for a number of months during the said period. As such, the appellants plea that such wrong utilization had occurred on account of the accountant being new cannot be appreciated. However, I also find force in the appellants contention that they do not gain anything by such early utilization of the credit inasmuch as the credit, as utilized would, not be available to them in the next subsequent month. Such wrong utilization invites confirmation of interest which is also required to be considered as penal in nature. However, admittedly, there has been contravention of law by the appellant repeatedly which in my view would invite some penal action against them. As such extending the benefit of doubt and after taking note of the fact that they were having sufficient balance in their PLA during the months of default and keeping in mind that appellant has already paid interest to the extent of Rs.7,176/-, I impose a penalty of Rs.10,000/- (Rupees Ten Thousand Only).

6.1 It is also seen that the lower authorities have confirmed the excess amount of CENVAT credit which stands wrongly utilised by them. Inasmuch as that credit was admittedly available to the assessee. I find no reasons to confirm the demand. The same is accordingly set aside.

The appeal is disposed of in above terms.

(Order pronounced in open court)

ARCHANA WADHWA JUDICIAL MEMBER

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