Judgment:
Ashok Jindal
Vide impugned order, the adjudicating authority disallowed the wrongly availed credit of Rs.1,41,226/- with interest and imposed equivalent amount of penalty.
2. Brief facts of the case are that the appellants are manufacturer of man-made fabrics falling under Chapter Sub-Heading 55 of Central Excise Tariff Act, 1985. The appellants had opted for exemption from payment of duty under Notification No. 30/2004 vide letter dated 09.07.2004. On scrutiny of records, it was found that the appellants had availed excess CENVAT credit of Rs.1,27,479/- in August 2003 and Rs.13,747/- in December, 2003, for which no document was available with the appellants. Therefore, they reversed the said amounts on 30.04.2007. As per the conditions of the Notification, the assessee reversed the entire amount of CENVAT credit from their accumulated CENVAT credit balance. The contends of the Revenue is that as it is an admitted fact by the appellants that they have taken CENVAT credit wrongly, therefore the appellants are liable to pay the CENVAT credit taken wrongly along with interest and penalty. Accordingly, a show-cause notice was issued to them and the same was confirmed by the adjudicating authority. Aggrieved by the same, the appellants preferred an appeal before the Commissioner (Appeals), who in turn upheld the impugned order. Aggrieved by the impugned order, the appellants are before me.
3. Shri Prakash Shah, learned Advocate appearing for the appellants submits that as per the Notification No. 30/2004 dated 9.7.2004, the credit balance in their CENVAT credit was lapsed. The credit has been accumulated in this matter prior to 09.07.2004 and since August, 2003 the date when they first took credit wrongly they were having sufficient balance in their CENVAT account and at that time of opting out from payment of duty by way of Notification No.30/2004 they were having a balance of Rs.4,31,552/- in their basic duty account. Therefore, wrongly taken amount by the appellants are to be adjusted from the closing balance of their CENVAT credit account. Therefore, they are not required to pay any amount as per the impugned order.
4. On the other hand the learned A.R. reiterated the impugned order and submitted that once an allegation against the appellant is proved that they are wrongly taken the credit, therefore they are liable to pay the duty confirmed as per the impugned order.
5. Heard both sides and examined the records.
6. On examination of the records, I find that the appellant has taken the credit wrongly on two occasions in August, 2003 and in December, 2003. I have also examined the RG 23A Part II which shows that excess balance in their CENVAT account but they have availed wrongly and there was sufficient balance on 09.07.2004 when they have opted for exemption under Notification No.30/2004. If no CENVAT credit is taken wrongly that will be having impact on the closing balance on 09.07.2004. On 09.07.2004 the closing balance in the CENVAT credit is more than the credit wrongly availed by the appellant. In view of these observations, I hold that the appellants are not required to pay CENVAT credit after lapse on 09.07.2004 and the same is to be adjusted from the closing balance available on 09.07.2004. As there is no duty liability, no penalty is imposable.
7. Accordingly, the impugned order is set aside and the appeal is allowed.