Inadmissible CENVAT credit - Reversal before utilisation thereof and before issue of SCN- No Penalty.

CCE.,Salem vs. Crocodile India Pvt. Ltd (2013-TIOL-518-HC-MAD-CX)

Facts:

The respondent a manufacturer of readymade garments claimed inadmissible credit of Rs. 15,07,414/- and subsequently reversed the same, evidently before the issue of SCN. The department confirmed interest and penalty although the assessee did not utilise credit and reversed immediately on receipt of intimation about the error. In absence of any other intention of wrongful gain, the Tribunal set aside the levy of penalty. The revenue challenges it in this appeal.

Held:

Undoubtedly, the respondents claimed inadmissible CENVAT and reversed the same before the issue of Show Cause Notice. Further, the Show Cause Notice being bereft of detailing grounds for imposing penalty under Rule 13(1) of the CENVAT Credit Rules, 2004 and following the decision of UOI vs. Rajasthan Spinning & Weaving Mills 2008 (231) ELT 3 (SC) wherein it was pointed out that application of section 11AC would depend on existence or of conditions expressly stated in the said section, the appeal was dismissed.