The Tribunal allowed the appeal, holding that an admitted clerical omission regarding CENVAT credit on cancelled invoices, subsequently reversed with payment, did not justify imposition of penalty or extended limitation due to lack of willful negligence or revenue loss.
The appeal is allowed with consequential relief; the demand and penalty are not maintained.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
Central Excise Appeal No. E/21832/2015
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL BANGALORE
REGIONAL BENCH - COURT NO. 2
Central Excise Appeal No. 21832 of 2015
(Arising out of Order-in-Original No. 12/HEB/COMMR/B1/2015 dated 08.05.2015 passed by the Commissioner of Central Excise, Bangalore-I Commissionerate, Bengaluru.)
M/s. Bostik India Pvt. Ltd.,
124/1-124/2a, Kachanayakanhalli, Anekal Taluk, Bommsandra Industrial Area, Bangalore – 562 106.
………. Appellant(s)
Versus
Commissioner of Central Excise
Bangalore - I. ……….. Respondent(s)
Appearance:
Mr. Basavaraja Nishani and Mr. Saurabh Bhutra, Consultants for the Appellant.
Mr. Neeraj Kumar, Superintendent (AR) for the Respondent.
Coram:
Hon'ble Mr. P.A. Augustian, Member (Judicial) Hon'ble Mr. Pullela Nageswara Rao, Member (Technical)
Final Order No. 20975 /2025
Date of Hearing: 03.01.2025 Date of Decision: 02.07.2025
Per : P.A. Augustian
The issue in the present appeal is regarding demand against wrong availment of CENVAT credit on cancelled invoice and imposition of penalty.
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Central Excise Appeal No. E/21832/2015
Appellant has not followed the prescribed procedure under Section 11B of the Central Excise Act, 1994 on such cancelled invoices and availed such CENVAT credit, proceedings were initiated alleging that it is in violation of the CENVAT Credit Rules, 2004 and the appellant is liable for recovery of cenvat credit irregularly availed on cancelled invoices for an amount of Rs. 50,31,141/- along with interest and penalty. In response to the above objection, the Appellant submitted that after paying of its liabilities for the month, they have examined the invoices cancelled in the last month and the excise duty relatable to the said cancelled invoices is taken back as CENVAT credit which has been wrongly debited in the CENVAT balance. Appellant have paid all such duties through CENVAT credit except educational cess and secondary higher education cess and no duties has been paid through PLA or in cash as the Appellant’s CENVAT balance was always higher than that of the excise duty payable during the disputed period. However, Adjudication authority as per the impugned order, disallowed the CENVAT credit with a finding that it is irregularly availed by the Appellant and also confirmed demand with interest and imposed penalty. Aggrieved by said order, present appeal is filed.
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Central Excise Appeal No. E/21832/2015
advance by the Superintendent or Inspector of the jurisdictional Range Office. The assessee will also maintain a record of such outward and inward movements, indicating date and time. Weighment should be done at the weighbridge nearest to the factory. The challan numbers shall be quoted on invoice. The Superintendent or inspector of the jurisdictional Range office will verify the challans and weighment slips randomly, at least once every month. If nothing adverse comes to notice, the permission may be renewed. Assessee should, however, be advised to install their own weighbridge inside the factory. 5. Thus, the system also casts a responsibility on the Department also to verify the error or omission committed on the part of Appellant. The Learned Consultant further submits that the issue is no more res integra and it is settled as per the decision of this Tribunal in the matter of M/s Motorola India Pvt. Ltd. Vs. Commissioner of C.Ex., Bangalore – III (2006 (193) E.L.T. 468 (Tri. – Bang.). Learned Consultant further submits that it is a revenue neutral situation and there is no loss of Revenue, since the Appellant has only taken credit of the amount which was in any case admittedly not payable. The Appellant also relied on the judgment of the Hon’ble Supreme Court in the matter of CC. Ex., Vs. M/s Narayan Polyplast -2005 (179) E.L.T 20 (SC) wherein it is held that according to Revenue, MODVAT was wrongly availed which is the exact amount paid by the assessee by way of excise duty. The Court accepted the plea of Revenue neutrality and dismissed the appeal of the Department. Further as regards revenue neutrality, the reliance of the Adjudication authority on the decision of this Tribunal in the matter of M/s. Jay Yushin, Learned Consultant for the appellant submits that Ld. Commissioner has misinterpreted the judgement of the Hon'ble Tribunal. The Hon'ble Tribunal in the instant case, simply held that revenue neutrality is to be applied having regard to facts of each case and held that " Where the scheme opted for by the assessee is found to have been misused (in contradistinction to mere deviation or failure to observe all the conditions) the existence of an alternate scheme would not be an acceptable defence" . Therefore, the Tribunal has expressly held that said judgment is not in case of “ mere deviation or failure to observe all the conditions”.
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Central Excise Appeal No. E/21832/2015
Ex. & Cus., Surat – III Vs. M/s Creative Enterprises (2009 (235) E.L.T. 785 (Guj.)) and C.C.E., Bangalore-V. Vs. M/s Vishal Precision Steels Tubes & Strips Pvt. Ltd., (2017 (349) E.L.T. 686 (Kar.))
:-(ii) Formica India Division Vs. Collector of Central Excise [1995 (77) E.L.T. 511 (S.C.)]
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Central Excise Appeal No. E/21832/2015
(Order pronounced in Open Court on 02.07.2025)
(P.A.Augustian) Member (Judicial)
(Pullela Nageswara Rao) Member (Technical)
hr/Sasi
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2 issues framed by the court
Whether an admitted omission to credit CENVAT on a cancelled invoice, which was subsequently reversed and paid, warrants imposition of penalty and demand under the CENVAT Credit Rules.
Whether the extended period of limitation can be invoked for an omission that is shown only to be a clerical mistake without willful negligence.
Colour shows how this judgement treated each authority
M/s Motorola India Pvt. Ltd. Vs. Commissioner of C.Ex., Bangalore – IIIRelied on¶26
(2006 (193) E.L.T. 468 (Tri. – Bang.))
CC. Ex., Vs. M/s Narayan PolyplastRelied on¶26
(2005 (179) E.L.T 20 (SC))
M/s. Jay YushinDistinguished¶26
M/s. Jay Yushin
Commissioner of Central Ex. & Cus., Surat – III Vs. M/s Creative EnterprisesRelied on¶33
(2009 (235) E.L.T. 785 (Guj.))
Commissioner Vs. Creative EnterprisesRelied on¶35
(2009 (243) ELT A120 (SC))
CCE, Bangalore-V Vs. Vishal Precision Steel Tubes & Strips Pvt. Ltd.Relied on¶36
[2017 (349) ELT 686 (Kar.)]
Mangalore Chemicals And Fertilizers Ltd. Vs. Dy. CommissionerRelied on¶38
(1991 (55) ELT 437 (SC))
Formica India Division Vs. Collector of Central ExciseRelied on¶39
(1995 (77) E.L.T. 511 (S.C.))
3 provisions across 3 enactments
M/s. Bostik India Pvt. Ltd.
Commissioner of Central Excise, Bangalore-I
P.A. Augustian
Pullela Nageswara Rao
As recorded by the court registry
An appeal in a central excise matter before CESTAT.
Judgements on the same questions, provisions and authorities, from every court