2009 (12) TMI 741 - AT - Central Excise

Summary

Issues: Rebate claim rejection, imposition of penalty, applicability of Section 11AC, Rule 15(1) of Cenvat Credit Rules, 2004, appeal by Revenue.

Analysis:
1. Rebate Claim Rejection: The case involved a rebate claim submitted by M/s. Multiple Exports, which was partly allowed by the Department. However, a portion of the rebate claim amounting to Rs. 28,821/- was rejected due to non-receipt of raw materials from suppliers found to be non-existent.

2. Imposition of Penalty: The Assistant Commissioner, while rejecting the rebate claim, imposed a penalty of Rs. 28,821/- (equal to the rebate claim amount) and an additional penalty of Rs. 3,000 under Rule 25 of Central Excise Rules, 2002. On appeal, the Commissioner (Appeals) reduced the penalty to Rs. 2,882, holding that Section 11AC was not attracted as the appellants were not party to the fraud.

3. Applicability of Section 11AC: The Revenue appealed against the Commissioner's decision, seeking a penalty equal to the rebate amount denied to the respondents under Rule 15(2) of Cenvat Credit Rules, 2004, read with Section 11AC of the Central Excise Act, 1944. The Revenue argued that penalty should be imposed in accordance with the mentioned provisions.

4. Legal Arguments: The Revenue relied on a Tribunal decision and the Supreme Court ruling in a specific case to support their contention that penalty equal to duty is imposable. However, the advocate for the respondents argued that this case did not involve a demand but a rejection of part of the rebate claim, making the mentioned decisions inapplicable.

5. Judgment: The Tribunal found in favor of the respondents, agreeing with the advocate's arguments. It was held that the penalty under Section 11AC was not applicable in this case, and the penalty was rightly considered under Rule 15(1) of Cenvat Credit Rules, 2004. The appeal filed by the Revenue was deemed to have no merits and was consequently rejected.