2010 (6) TMI 345 - AT - Central Excise

Penalty - appellant availed credit before the receipt of the inputs in the factory - credit so taken was utilized for payment of duty when the appellant had not sufficient balance in their Cenvat Account - Held that - conditions mentioned under Section 11AC of the Act are fulfilled as appellant suppressed the material fact with intent to evade payment of duty by taking credit - appellants are liable for penalty under Section 11AC of the Act - appeal is dismissed

Summary

Issues:
1. Imposition of penalty under Section 11AC of the Central Excise Act.
2. Applicability of penalty for availing Cenvat credit before receipt of inputs.
3. Jurisdiction of authorities to impose penalty equal to the amount of duty.

Analysis:
1. The case involved the imposition of a penalty under Section 11AC of the Central Excise Act. The appellant availed Cenvat credit before the receipt of inputs in the factory, leading to a show cause notice for wrongly taking credit and utilizing it for duty payment without sufficient balance in their Cenvat account. The adjudicating authority confirmed a demand and imposed a penalty equal to the duty amount under Section 11AC. The Tribunal upheld the duty order but reduced the penalty to Rs. 2.00 Lakhs.

2. The Revenue appealed against the Tribunal's decision to reduce the penalty. The matter was remanded to the Tribunal by the Hon'ble Supreme Court to reconsider the penalty imposition in light of a previous decision related to deliberate evasion of duty payment. The Supreme Court's decision highlighted that penalty under Section 11AC is applicable in cases of deliberate evasion by the assessee with intent to evade duty payment through specified means.

3. The Tribunal found that the appellant's actions fulfilled the conditions under Section 11AC as they availed credit before input receipt and utilized it for duty payment when inputs were not received, leading to a shortage in the Cenvat account. The deliberate suppression of facts with intent to evade duty payment triggered the penalty imposition. The Tribunal emphasized that authorities cannot impose a penalty lower than the confirmed demand amount, as per the Supreme Court's ruling. Therefore, the Tribunal upheld the penalty equal to the duty amount, dismissing the appeal.

This detailed analysis of the judgment provides insights into the legal aspects surrounding the imposition of penalties under the Central Excise Act, specifically focusing on the deliberate evasion of duty payment through the misuse of Cenvat credit before the receipt of inputs.