2008 (1) TMI 713 - AT - Central Excise

Summary

Issues:
The issues involved in this case are the imposition of penalty on the assessee for availing irregular Cenvat credit on inputs not received in the factory premises, violation of Rule 13 of the Cenvat Credit Rules, and the question of penalty imposition when availment of Modvat credit is allowed.

Imposition of Penalty:
The appeal arose from an Order-in-Appeal directing the Assistant Commissioner to impose penalty on the assessee for violating Rule 13 of the Cenvat Credit Rules by availing irregular Cenvat credit on inputs not received in the factory premises. The Commissioner (Appeals) upheld the availment of Cenvat credit on Cranes, which had not reached the factory, and did not impose a penalty. However, the department filed an appeal against this decision. The Tribunal held that since the availment of credit was justified by the Commissioner (Appeals), the order to impose a penalty was not correct. Citing relevant case law, the Tribunal set aside the impugned order and allowed the appeal in favor of the assessee.

Legal Precedents and Arguments:
The learned Consultant argued that when the availment of Modvat credit is allowed by the Department, penalty should not be imposed, citing relevant judgments. On the other hand, the learned JDR referred to cases where penalty was imposed for wrongful availment of Cenvat credit. The Tribunal noted that the cases cited by the JDR were not applicable to the present situation, as the Commissioner (Appeals) had upheld the availment of Cenvat credit on Cranes in favor of the assessee. The Tribunal found that the order to impose a penalty was not legal and proper, and set it aside, providing consequential relief to the assessee.

Conclusion:
In conclusion, the Tribunal set aside the order directing the imposition of a penalty on the assessee for availing irregular Cenvat credit on inputs not received in the factory premises. The Tribunal found that the Commissioner (Appeals) had upheld the availment of credit in favor of the assessee, and therefore, the penalty imposition was not justified. The appeal was allowed in favor of the assessee with consequential relief, if any.