2008 (5) TMI 688 - AT - Central Excise

Summary

Issues involved: Appeal against penalties under Rule 15 of Cenvat Credit Rules, 2004 and Section 11 AC of the Central Excise Act, 1944.

Summary:

Penalty under Rule 15 of Cenvat Credit Rules, 2004:
The Revenue appealed against the Commissioner (Appeals) order setting aside penalties of &8377; 25,000 under Rule 15 of Cenvat Credit Rules, 2004. The Revenue argued that the Respondents failed to submit copies of invoices with Returns, leading to the burden of admissibility of Cenvat Credit not being discharged. It was claimed that the Respondents had taken excess Cenvat Credit willfully, based on invoices, which was inadmissible. However, the Respondent's Counsel contended that the issue pertained to the interpretation of rules, favoring the Respondent based on a previous Tribunal decision. The Respondents had already paid the entire duty with interest, making the imposition of penalties unwarranted. The Judicial Member found that the penalties were set aside by the Commissioner (Appeals) due to an issue concerning the interpretation of Rule 3 (7) (a) of the Cenvat Credit Rules, 2004. Given that a previous Tribunal decision favored the Respondents on this issue and the duty had been paid with interest, the appeals filed by the Revenue were rejected.

Penalty under Section 11 AC of the Central Excise Act, 1944:
In addition to the penalty under Rule 15 of Cenvat Credit Rules, 2004, the Revenue also appealed against the setting aside of penalties amounting to &8377; 1,17,416 under Section 11 AC of the Central Excise Act, 1944. The arguments and findings mirrored those related to the penalties under Rule 15 of the Cenvat Credit Rules, 2004. The Judicial Member, after considering both sides and reviewing the records, upheld the decision of the Commissioner (Appeals) to set aside the penalties under Section 11 AC of the Central Excise Act, 1944. The basis for this decision was the same as for the penalties under Rule 15 of the Cenvat Credit Rules, 2004, namely, the issue of interpretation of Rule 3 (7) (a) of the Cenvat Credit Rules, 2004, which had been decided in favor of the Respondents in a previous Tribunal case. The fact that the duty had been paid with interest further supported the rejection of the Revenue's appeals.

Separate Judgement: No separate judgment was delivered by the judges in this case.