2006 (12) TMI 17 - AT - Central Excise

Penalty- Duty deposited by appellant before issuance of SCN but as per law it is regarded that payment of correct duty should be at a correct point of time only acceptable So penalty imposable on him

Summary

Issues:
Challenge to setting aside penalty under Rule 13 of Cenvat Credit Rules, 2001 read with Section 11AC of the Central Excise Act, 1944.

Detailed Analysis:

1. The adjudicating authority found a shortage of cenvatable inputs during a physical verification, with inadmissible Cenvat credit on High-Speed Diesel (HSD). The authority imposed a penalty of Rs. 52,749, which was set aside by the Commissioner (Appeals) citing settled law that no penalty is warranted if duty is deposited before the show cause notice. The removal of inputs without declaration and the evasion of duty were considered suppression. The Appellate Commissioner upheld this finding, rejecting the argument of the noticee regarding the time-barred show cause notice.

2. The revenue contended that suppression of facts and clandestine removal justified the penalty, citing legal precedents. On the other hand, the respondents argued based on a Tribunal decision that penalty is not justified if duty is deposited before the notice. They also referenced other court decisions supporting this stance.

3. The case involved a shortage of inputs and inadmissible credit on HSD, leading to the imposition of a penalty. The respondents voluntarily debited the amounts related to the shortage and inadmissible credit after detection by Revenue officers. The authorities rightly rejected the claim of bona fide mistake regarding the credit on HSD, as it was reversed only after detection.

4. The decisions cited by the respondents did not support their case of clandestine removal and inadmissible credit. The extended period for the show cause notice was justified, and duty was paid after detection. Courts emphasized the importance of paying correct duty at the right time, not at the discretion of the assessee, and stated that depositing duty after detection does not negate penalty under Section 11AC.

5. Considering the facts and legal precedents, the Tribunal set aside the Commissioner's order and restored the penalty imposed by the adjudicating authority. The decision was based on the evasion of duty, suppression of facts, and the inadmissible nature of the Cenvat credit taken by the respondents.

This comprehensive analysis covers the issues, arguments, legal precedents, and the final decision of the Appellate Tribunal CESTAT, New Delhi regarding the challenge to the penalty imposed under the Cenvat Credit Rules and the Central Excise Act.