2008 (3) TMI 568 - AT - Central Excise

Summary

Issues involved:
Imposition of penalty under Rule 25 of the Central Excise Rules, 2002 for availing credit of duty on capital goods and subsequent reversal.

Detailed Analysis:

1. Imposition of Penalty:
The appellant filed an appeal against the imposition of a penalty of Rs. 10,000 for availing credit of 50% duty on capital goods, subsequently returning the goods and reversing 50% credit. The Audit Authority noted discrepancies in the duty reversal process, leading to a show cause notice after two years. The adjudicating authority confirmed the duty demand of Rs. 7,956 but dropped the penalty. The Revenue appealed to the Commissioner (Appeals) who imposed the penalty under Rule 25 of the Central Excise Rules, 2002.

2. Adjudication and Findings:
The appellate tribunal reviewed the case and observed that the penalty was dropped initially as the appellant had deposited the duty with interest before the show cause notice was issued. It was noted that the appellant had availed 50% duty credit and reversed it upon returning the goods, although their invoice reflected 100% duty. The tribunal found no malice in the appellant's actions and disagreed with the Commissioner (Appeals) who based the penalty on the Department pointing out the duty deposit. Consequently, the tribunal set aside the Commissioner's order and reinstated the adjudication order, allowing the appeal with consequential relief.

In conclusion, the appellate tribunal overturned the penalty imposed under Rule 25 of the Central Excise Rules, 2002, citing lack of malicious intent on the part of the appellant and the timely deposit of duty with interest before the issuance of the show cause notice. The tribunal emphasized the factual context of the case in determining the appropriateness of penalty imposition, ultimately ruling in favor of the appellant and setting aside the Commissioner (Appeals) decision.