2009 (8) TMI 940 - AT - Central Excise

Summary

Issues:
- Appeal against reduction of penalty under Rule 15 of the Cenvat Credit Rules, 2002.

Analysis:
The appeal was filed by the Department against an order by the Commissioner (Appeals) reducing the penalty under Rule 15 of the Cenvat Credit Rules, 2002. The Commissioner had upheld the confirmation of the Cenvat credit demand against the respondent but reduced the penalty from Rs. 1,08,160 to Rs. 8,000. The Department contended that the reduction of penalty was contrary to the provisions of Rule 15 of the Cenvat Credit Rules, 2002. The respondent requested a decision on merit after submitting cross objections.

The Department argued that the penalty for contravening the provisions of the Cenvat Credit Rules should be equal to the wrongly taken Cenvat credit amount, which in this case was Rs. 1,08,000. They cited Rule 15(1) of the Cenvat Credit Rules, 2002 and a Tribunal's order in a similar case to support their position.

The judge carefully considered the arguments presented by both sides. It was noted that as per Rule 15(1) of the Cenvat Credit Rules, 2002, the penalty should not exceed the duty on the goods in question or Rs. 10,000, whichever is greater. The judge clarified that this rule sets an upper limit for the penalty. If the duty amount is less than Rs. 10,000, the penalty should not exceed Rs. 10,000, and if the duty amount is more, the penalty should not exceed the duty involved. The judge emphasized that the rule does not mandate imposing a penalty equal to the upper limit. Drawing on a precedent involving a similarly worded rule, the judge dismissed the Revenue's appeal, stating that the penalty should be within the specified upper limits. The Cross Objection was also disposed of accordingly.