2009 (11) TMI 695 - AT - Central Excise

Summary

Issues: Duty demand under CENVAT Credit Rules, 2002; Suppression of facts leading to penalty imposition.

Duty Demand under CENVAT Credit Rules, 2002:
The judgment confirms a duty demand of Rs. 1,23,729 against the assessees for availing CENVAT credit on certain inputs and clearing them as defectives without paying duty, contravening Rule 3(5) of the CENVAT Credit Rules, 2002. The extended period of Limitation was applied due to suppression. The demand was upheld with interest and penalty imposed under Section 11 AC of the Central Excise Act, 1944. The assessees contended before the Commissioner (Appeals) that they did not suppress any facts and, therefore, penalty was unjustified. However, the Commissioner (Appeals) upheld the order, leading to this appeal.

Suppression of Facts Leading to Penalty Imposition:
The judgment finds the assessees guilty of suppressing facts with the intention to evade duty payment. This conclusion was based on the assessees' actions of raising invoices detailing the value and duty payable on clearances of defective inputs, indicating awareness of their duty liability. Despite this, they did not pay duty on clearing the defective inputs. Additionally, the admission of the Chairman & Managing Director of the assessees further supported the charge of suppression. Consequently, the assessees were deemed liable for penalty under Section 11 AC of the Central Excise Act, 1944. The judgment upholds the penalty, stating that the charge of suppression was clearly established, and rejects the appeal.

This judgment highlights the importance of complying with duty payment obligations under the CENVAT Credit Rules, 2002 and emphasizes the consequences of suppressing facts to evade duty liability. The decision underscores the significance of maintaining transparency in financial transactions and fulfilling duty obligations to avoid penalties and legal repercussions.