By TIOL News Service

CHANDIGARH, AUG 24, 2018: DURING audit it was found that the appellant had been availing Cenvat credit in respect of common input services such as manpower recruitment agency service, security service and business auxiliary service.

Revenue viewed that since the appellant was manufacturing dutiable as well as exempted goods they were liable to pay an amount in terms of Rule 6(3) of CCR, 2004. The appellant admitted the mistake and deposited the amount.

In adjudication, the original authority confirmed the demand and appropriated the amount already deposited. Penalty ws also imposed u/r 15 of CCR, 2004 r/w Section 11AC of CEA, 1944.

As their appeal was rejected by the Commissioner (A), the appellant is before the CESTAT and contests only the penalty portion of the order.

The Bench observed -

++ In this case SCN was issued on 24.6.2016 for recovery of Cenvat credit and appropriation of Cenvat credit which had already been reversed by appellant immediately on being pointed out by the audit party.

++ Admittedly, the appellant had sufficient balance in their Cenvat Credit account and had not utilized Cenvat credit in dispute.

++ The SCN not does not make express allegation of suppression or wilful misstatement. In the absence of this, penalty is liable to be set aside.

Relying upon the decisions in Flextronics Technologies (India) Pvt. Ltd. 2015-TIOL-676-HC-KAR-CX and M/s.Vilax Industrial Fabrics Survey - 2018-TIOL-1363-HC-KAR-CX, the penalty imposed was set aside.

The appeal was disposed of.

(See 2018-TIOL-2604-CESTAT-CHD)