2016 (6) TMI 1211 - AT - Central Excise

Imposition of penalty - provisions of Rule 57 U(6) of CER, 1944 - Held that - the appellant having availed the CENVAT credit on the basis of documents received by them from M/s. Simplex Engineering & Foundry Works showing the classification as falling under 8474.90, no malafide can also be attributable to them - penalty imposed upon the appellant is set aside - penalty set aside - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
Imposition of penalty under Rule 57 U(6) of Central Excise Rules, 1944 based on the classification of bins under different headings by the manufacturer and the Revenue.

Analysis:
The appellant, engaged in manufacturing iron and steel products, availed Cenvat credit on bins procured from a manufacturer classified under heading 8474.90. The Revenue contested this classification, proposing 73.08 instead. Common proceedings against the manufacturer and the appellant led to a show cause notice and subsequent order confirming demand and denying Cenvat credit, along with imposing penalties.

The Tribunal had set aside the order against the manufacturer on the grounds of limitation. The appellant argued that since the same order was set aside, there was no justification for imposing penalties on them. The Tribunal noted that the manufacturer's classification declaration was accepted by the Revenue, absolving them of any suppression allegations. As the appellant relied on documents from the manufacturer for availing Cenvat credit, no malafide intent could be attributed to them, leading to the setting aside of the penalty imposed on the appellant.

In conclusion, the Tribunal allowed the appeal, setting aside the penalty imposed on the appellant while not interfering with the denial of credit part of the impugned order. The decision was based on the lack of malafide intent on the part of the appellant due to their reliance on the manufacturer's classification declaration accepted by the Revenue.