2006 (3) TMI 571 - AT - Central Excise

Summary

Issues: Liability under Rule 6(3)(b) of Cenvat Credit Rules, 2002 and imposition of penalty for non-payment.

In the case, the appellants were involved in manufacturing a dutiable product and had cleared "Spent Sulphuric Acid" without duty payment under an exemption Notification. The issue arose when the department demanded payment under Rule 6(3)(b) of the Cenvat Credit Rules, 2002, as the appellants did not maintain separate accounts for common inputs used in both dutiable and exempted product manufacturing. The department issued a show-cause notice demanding payment of Rs. 16,932 and imposed a penalty of Rs. 5,000. The appellants did not contest the demand but challenged the penalty.

Upon hearing both sides, the Tribunal found that the appellants were not contesting the demand amount but only the penalty. The appellants claimed a bona fide mistake, stating they were unaware of the specific rule and relied on a previous rule without a recovery mechanism. However, this argument was not raised earlier and was deemed invalid. The Tribunal held that ignorance of the law could not justify the plea of "bona fide mistake" and upheld the penalty of Rs. 5,000. Consequently, the impugned order was affirmed, and the appeal was dismissed.