At, Customs Excise Service Tax Appellate Tribunal Principal Bench New Delhi
By, THE HONOURABLE MR. M. VEERAIYAN
By, TECHNICAL MEMBER
For the Appellant: Rajesh Kumar, Advocate. For the Respondent: Mahesh Rustogi, Authorized Departmental Representative (DR).
M. Veeraiyan, Technical Member
This is an appeal against the order of the Commissioner (Appeals) No. 37-CE/NOIDA/08 dated 25.2.2008.
2. Heard both sides.
3. The relevant facts, in brief, are that the appellant imported certain inputs and components and moulds and took credit of special additional duty of customs paid at 4% ad valorem on the imported goods. When the officers visited the factory on 1.11.2006 and pointed out that they were not eligible for the credit of special additional duty, the appellants promptly reversed the credit and paid the interest. A show cause notice was issued on 18.5.07 alleging irregular availment of credit proposing demand of duty (which stood already paid along with interest) and proposing imposition of penalty. The show cause notice also proposed a demand of Rs.13,765/- of wrongly availed credit of service tax which also stood paid before issue of show cause notice. The original authority in pursuance of the show cause notice confirmed the demand along with interest as proposed in the show cause notice and imposed an amount of Rs.1,54,890/-as penalty under Section 11AC. He also imposed penalty of equal amount on the Manager (Finance). Commissioner (Appeals) upheld the order of the original authority in so far as it relateed to the appellant company but set aside the penalty on the Manager of the company. The company is in appeal against the imposition of penalty.
4. Learned Advocate for the appellant submits that it is due to misunderstanding that they have taken credit as they were under impression that all additional duties paid are admissible as cenvat credit. He also submits that as soon as mistake was pointed out they promptly paid the duty involved. He submits that the details of credit taken stand included in the returns filed by them. As the wrongly taking of credit was under bona fide belief and the same on being pointed out, the appellants promptly paid the duty along with interest, the show cause notice itself should not have been issued. At any rate, the imposition of penalty is not warranted.
5. Learned DRstrongly supports the order of the Commissioner (Appeals). He draws my attention to the finding of the Commissioner (Appeals) that when the evasion is caught during checking and when the evasion is of recurring nature, mandatory penalty is required notwithstanding the deposit of the amount before issue of show cause notice. He also relies on the decision of the Hon’ble Supreme Court in the case of UOI vs. Rajasthan Spinning & Weaving Mills reported in 2009 (238) ELT 3 (SC).
6. I have carefully considered the submissions from both sides and perused the records. No doubt, the appellants are not eligible to take credit of special additional duties at 4% levied under Section 3(5) of the Customs Tariff Act, 1975. The submission on behalf of the appellants was that in view of nomenclature of the levy of additional duties in lieu of sales tax and local levies being ‘additional duties’ they have taken credit bona fidely as they believed that all additional duties were eligible as credit. The submission deserves to be accepted. Further, as submitted by them, details of credit taken were furnished by them in the returns submitted by them. This is a fit case that the Department should have refrained from issuing show cause notice in terms of Section 11A(2B) of the Act. I do not find any mala fide in the conduct
Please Login To View The Full Judgment!
of the appellants. Therefore, the question of invoking the provisions of Section 11AC to impose a mandatory penalty does not arise. The decision of the Hon’ble Supreme Court in the case of Rajasthan Spinning & Weaving Mills cited supra does not apply to the facts of the present case. 7. In view of the above, the appeal is allowed with consequential relief, as per law.