2009 (1) TMI 565 - AT - Central Excise

Summary

The Appellate Tribunal CESTAT, Ahmedabad, in the 2009 case of 2009 (1) TMI 565 - CESTAT, Ahmedabad, heard an appeal regarding the disallowance of Cenvat credit on grey fabrics by the respondents, who were registered for manufacturing manmade fabrics. The Revenue discovered that the suppliers of the grey fabrics were non-existent/fake, leading to a show cause notice and subsequent disallowance of credit. The Commissioner found the respondents not guilty of fraud but held them responsible for contravening Cenvat Credit Rules. The Commissioner imposed a penalty under Rule 13(1) (now 15(1)) of Cenvat Credit rules. Upon appeal, the Revenue argued for a penalty under Section 11AC, but the Tribunal upheld the Commissioner's decision, stating that the evidence did not support fraud or suppression of facts. The Tribunal concluded that the penalty under Rule 13 was appropriate and rejected the Revenue's appeal. The judgement highlights the importance of taking reasonable steps to ensure compliance with Cenvat Credit Rules.