2008 (6) TMI 420 - AT - Central Excise

Summary

Issues involved: Common issue involved in both the appeals regarding imposition of penalty under Rule 15 of Cenvat Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944.

Summary:

Issue 1: Refund claim and imposition of penalty
The assessee was entitled to a refund of Rs. 2,94,085 as per the Final Assessment Order. The assessee availed the credit but later debited the amount in the RG-23A Part-II Account upon audit pointing out the irregularity. A show-cause notice was issued proposing to demand the amount and impose a penalty. The Asstt. Commissioner allowed the refund claim before passing the Adjudication Order. The penalty was imposed under Rule 15 of Cenvat Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944. The assessee contended that there was no intent to evade payment of duty and cited relevant case laws to support their argument.

Issue 2: Justification of penalty
The Revenue argued that the assessee availed the credit suo moto, which is impermissible under the law, and knowingly committed irregularities, justifying the penalty under Section 11AC of the Act.

Judgment:
After considering the submissions from both sides and reviewing the records, it was found that the assessee was entitled to the refund as per the Assessment Order. The assessee voluntarily debited the credit upon audit observation, and the Asstt. Commissioner had already allowed the refund before the Adjudication Order. It was concluded that there was no fraudulent activity or intent to evade duty, hence, the penalty under Rule 15 read with Section 11AC of the Act was deemed unwarranted. Consequently, the penalty was set aside, the appeal by the Revenue was rejected, and the appeal by the assessee was allowed.

(Order dictated and pronounced in open court on 3-6-2008.)