CESTAT Upholds ₹2.55L CENVAT Credit Demand with Interest, Sets Aside Penalty u/s. 11A(2) as Duty Paid Pre-SCN

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) upheld a ₹2.55 lakh CENVAT credit demand along with interest, ruling that the credit was wrongly availed on traded goods. However, the Tribunal set aside the penalty under Section 11AC of the Central Excise Act, 1944, as the duty and interest were paid before the issuance of the show cause notice, invoking Section 11A(2) which provides immunity from penalty in such cases. The appellant, M/s Zumax Equipments Pvt. Ltd., had availed the credit on items like panel enclosures and motors, which were traded and not used in manufacturing dutiable goods or taxable services. Upon audit, the company reversed the credit and paid the interest through its GSTR-3B return. The Tribunal found the credit inadmissible but acknowledged the pre-notice payment, leading to the partial relief by setting aside the penalty.