BHARAT ELECTRONICS LTD. Vs. CCE

JUDGEMENT

(1.) THE appellant had transferred CENVAT credit from one unit to the other and transfer challans were issued for this purpose. It was found during the scrutiny that challans were issued on 5.11.2007 and 30.7.2009 whereas credits were availed during the month of October 2007 and June 2009 respectively. Accordingly, the proceedings were initiated which has culminated in appropriation of the amount subsequently adjusted and demand for interest of Rs. 13,739/ - and penalty of Rs. 12,94,168/ - equal to the CENVAT credit wrongly availed under Section 11AC of Central Excise Act, 1944. The authorized representative of the assessee explained that the mistake happened because the credit was utilized by the transferring unit on the basis of SAP entries made by them in computer whereas the manual challan which were issued had a different date. The mistake happened only because of this reason and there was no intention to evade duty. Admittedly there is no demand for wrongly availed CENVAT credit and only interest has been demanded and penalty has been imposed.

(2.) WE find that the explanation given by the authorized representative of the assessee that the mistake has happened because of the mismatch between the SAP system utilized by them and the manual transfer of challans appears to be correct and therefore they could not have any intention to evade duty or avail CENVAT credit wrongly. Under these circumstances, the imposition of penalty under Section 11AC of Central Excise Act, 1944 cannot be sustained. As regards the demand for interest, since the credit could not have been utilized in the month in which it was utilized and it could have been utilized only in the subsequent month, the demand for interest for a month on each of the amounts cannot be found fault with, therefore the interest liability has to be upheld.