ORDER
K.D. Mankar, Member (T)
1. The appeal of the appellants is directed against the recovery of interest of Rs. 16,085/- and penalty of Rs. 5,000/- imposed by the lower authority. The part of the order recovering CENVAT credit of Rs. 3,65,107/- is not contested. The order of the Assistant Collector was challenged before the Commissioner (Appeals), who affirmed the said order. Hence the appeal to the Tribunal.
2. As mentioned earlier the appeal is directed only against the portion the order requiring them to pay interest and penalty.
3. The brief facts of the case are that:-
The appellants had taken cenvat credit on certain raw materials/inputs such as steel angels, channels, HR coils etc during the period December 2001 to March 2002 and utilised the same for fabrication and the manufacture of M.S.Tanks to be used in the factory premises. The M.S. Tanks was erected and installed on foundation, which means the same was attached to the earth and was an immovable property. The appellant reversed the credit in view of CBEC circular No. 58/12002-EX dated 15.1.02. A show cause notice was issued to them for imposition of penalty and recovery of interest which was confirmed by the adjudicating authority.
4. It is pleaded by the appellants that the matter was not clear and only after they came to know about non-availability of Modvat credit, in respect of inputs used in the manufacture of M.S. Tanks, they reversed the said credit taken wrongly. The Ld.DR on the other hand plead that the CBEC circular of 15.1.2002 was not the only piece of information regarding the non-liability of the goods, to excise duty, consequent to the goods becoming immovable property. There have been clarifications in the past also and therefore, the assessee can not take shelter of having acquired the knowledge, only on the basis of circular dated 15.1.2002.
5. Heard both sides.
6. The Ld. Counsel for the appellants pleads that, in view of the judgments of the Tribunal holding that payment of duty even before the issue of show cause notice does not call for imposition of penalty. In this case they have made such a payment and therefore penalty be set aside.
7. As regards the interest, I note that, the determination of the duty liability (short levy) has been made only vide the order 27.5.03 while the payment was made even before that determination. Therefore the interest liability will not arise.
8. So far as penalty is concerned in this particular case, considering the facts and circumstances that there was a possibility of a mis-understanding regarding the availability of credit of duty paid on the components of M.S. Tanks, which was undoubtedly covered by the Term Plant and Machinery in terms of old definition of capital goods, I take a linient view and hold that taking such ineligible credit did not warrant imposition of penalty.
Consequently the appeal succeeds so far as penalty and interest aspect of the impugned orders of the lower authority. Demand of interest and imposition of penalty are accordingly set aside. Denial of credit, not being under dispute, is not disturbed.
10. Appeal allowed in the above terms.
(Pronounced in open Court)