Full credit availed on capital goods

Bombay Paints Ltd vs. Commissioner of Central Excise, Mumbai-II (2015-TIOL-142-CESTAT-MUM)

Full credit availed on capital goods in the first year itself instead of 50%, at the most liable for interest, seeking reversal of credit and imposition of penalty is not warranted.

FACTS:

 The Appellant took 100 % credit on capital goods used in manufacture. CENVAT Credit was denied to the extent of 50% and interest and penalty was also imposed.

HELD:

Although, CENVAT Credit entitled was 50% in the first year instead of 100%. However the remaining credit of 50% is available in the subsequent year therefore at the most interest for the intervening period can be demanded and demand for duty and penalty was set aside