2007 (1) TMI 405 - AT - Central Excise

Summary

Issues involved: Appeal against setting aside of personal penalty u/s 11AC of Central Excise Act, 1944 imposed upon the respondents.

The dispute centered around Cenvat credit availed by the appellants in relation to capital goods, for which they also claimed depreciation u/s 32 of Income Tax Act, 1961. Upon realization of this, the appellants reversed the Cenvat credit and paid the interest. The original adjudicating authority imposed a personal penalty of the same amount, which was set aside by the Commissioner (Appeals) on the grounds that the duty was already paid before the show cause notice was issued. The revenue appealed this decision.

Upon considering the arguments from both sides, it was noted that the Larger Bench of the Tribunal in the case of Piaggio Greaves Vehicles Ltd. v. CCE, Pune, 2001 held that if the credit was availed but not utilized and subsequently reversed at the insistence of the revenue, there is no basis for penalty imposition. The appellant contended that since the credit remained unutilized, the penalty was unwarranted. Based on this and the precedent set by the Larger Bench, it was concluded that there was no justification for imposing a penalty in this case, leading to the rejection of the revenue's appeal.