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CX - Taking of wrong credit on 14 occasions cannot be termed as clerical mistake - penalty rightly imposed u/r 15(2) of CCR, 2004 - ROM dismissed: CESTAT

By TIOL News Service

MUMBAI, FEB 09, 2018: THIS is a case of wrong availment of CENVAT Credit of duty paid on capital goods.

Inasmuch as instead of availing credit of the duty paid on the part quantity received by them from a dealer, the assessee had availed credit on the full quantity that the registered dealer had purchased.

Nonetheless, they reversed the excess credit taken. However, proceedings were initiated and penalty and interest were imposed by the adjudicating authority and which order was upheld by the Commissioner(A).

The appellant filed an appeal before the CESTAT and sought waiver of penalty and interest by taking support of Tribunal decisions viz. - 2017-TIOL-49-CESTAT-DEL, 2016-TIOL-1140-CESTAT-ALL & 2014-TIOL-1768-CESTAT-MUM.

The CESTAT observed that during the period 04/02/2008 to 24/11/2009, the appellant had taken wrong credit on 14 occasions and mistake committed so often and for such a long time could not be called a clerical mistake. Holding that the availment of such credit was a deliberate act, the penalty imposed was upheld. On the question of imposition of interest, the appellant asserted that they have not utilized the credit but only made book entry. However, the Tribunal observed that the above submission was not supported by evidence and, therefore, interest was rightly payable.

The appeal was dismissed. We reported this order dated 24.08.2017 as - 2018-TIOL-498-CESTAT-MUM.

The appellant is again before the CESTAT with a ROM application.

It is pointed out that immediately after the hearing on 11/08/2017, the applicant had vide letter 14/08/2017, received in the registry on the same day, submitted the evidence containing data which showed that the said credit was not utilized. Furthermore, no evidence of such suppression, mis-declaration, etc. has been incorporated in the proceedings before the lower authorities to justify the imposition of penalty u/r 15(2) of CCR.

The AR resisted the application and submitted that the period of dispute is 2008-2009 and the Bombay High Court in the case of GL&V India Pvt. Ltd. - 2015-TIOL-1210-HC-MUM-CX has held that for the period prior to 2011 even if the credit wrongly availed has not been utilized the interest is payable; that the Larger Bench of the Tribunal in the case of JK Tyre & Industries Ltd. - 2016-TIOL-1781-CESTAT-BANG-LB has held that in case of different decisions of different Higher Courts, the Tribunal needs to follow the jurisdictional High Court.

The Bench observed -

"4. I have gone through the rival submissions. I find that the Hon'ble High Court in the case of GL & V India Pvt. Ltd. (supra) has distinguished the decision of the Hon'ble High Court of Karnataka in the case of Bill Forge Pvt. Ltd. and agree with the decision of the Hon'ble Apex Court in the case of Ind-Swift Laboratories Ltd. - 2011-TIOL-21-SC-CX. In view of the above, the liability of interest cannot be set aside, even if the appellants have not utilized the credit. It is seen that the show-cause notice does not specifically say that the appellants have mis-declared the price or committed fraud etc. However, from the Annexure-A to the show-cause notice it is seen that the applicants have taken inadmissible credit 14 times. In view of such a clear evidence, no specific allegation is necessary to invoke Rule 15(2) of the Cenvat Credit Rules, 2004."

Concluding that there is no merit in the ROM application,the same was dismissed.

(See 2018-TIOL-499-CESTAT-MUM)