The audit finding of irregular credit reversed by Nexteer Automotive India Pvt. Ltd results in overturned penalty decision.
Facts
M/s. Nexteer Automotive India Pvt. Ltd, the appellants are manufacturers of excisable goods viz., Halt Shaft Assembly, Column Assembly, Steering Assembly, etc. Audit officers visited the premises of the appellant and audited their records for the period from January 2013 to December 2013. During the course of audit, the audit officers found that the appellant had availed irregular credit and the entire credit was reversed by the appellant on 30.01.2014. The audit report observed that “As the assessee had maintained sufficient balance in their cenvat account all along, the assessee was not charged with interest and penalty.”
These show-cause notices were adjudicated vide Order-in-Original and Order-in-Original wherein the Original Authority had imposed 50% of duty involved as penalty. Aggrieved by this order, the appellant preferred an appeal before the Commissioner (A), the Commissioner (A) vide Order-in-Original remanded the cases to the Original Authority after observing that since the appellant had sufficient credit balance available in the CENVAT account and the fact that the credit so availed was never utilised, there appears to be no reason for imposing penalties as the credit was reversed much before the issue of demand notice. Based on this remand proceedings, the Original Authority vide Order-in-Original once again imposed penalty on the appellant which is equivalent to 50% of the duty was leviable.
Submissions
Chartered Accountant Vinayaka Hegde, on behalf of the appellant submitted that the audit parties in their audit report had categorically mentioned that the assessee was not charged with interest and penalty since they had immediately reversed the credit and sufficient balance of credit was available in their records.
Authorised Representative for the Revenue submitted that the appellant was liable to pay 50% of the penalty which has been rightly imposed by the adjudicating authority.
Decision
The single bench of R. Bhagya Devi, Member (Technical) said that the audit officers visited the appellant’s unit in the month of January and February 2014 and during the course of audit, they noted that some irregular credit was being availed on certain input services.
The bench noted that the irregular credit taken on input services during the period from January 2013 to December 2000 was ₹87,811, 4,45,680 and 2,86,271 and these amounts were reversed by the appellant on 30th January 2014.
The Tribunal observed that in order to invoke the provisions, it is necessary to prove either fraud or collusion or wilful misstatement or suppression of facts or contravention of any of the provisions with intention to evade payment of duty.
It was further observed that unfortunately, none of these ingredients have been invoked in the notices and the impugned order also does not provide any evidences except to state that that the irregular availment of cenvat credit came to light only at the time of audit.
The bench stated that the case is based only on the audit para and there is no iota of evidence to prove either suppression or misdeclaration of facts or contravention of provisions with intention to evade payment of duty. On the other hand, the appellant immediately reversed the credit as and when it was pointed out by the audit officers and the officers clearly noted that interest and penalty are not to be levied. Inspite of these notices were issued after nearly 2 years after the audit observations and reversal of credit.
The bench further observed that there is no allegation of suppression or misstatement of facts or any other sub-clauses of section 11 A(4).
Case title: M/s. Nexteer Automotive India Pvt. Ltd. v/s The Commissioner of Central Excise and Service Tax
Citation: Central Excise Appeal No. 20816 of 2022
