9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2010 (12) TMI 203 - AT - Central ExciseCenvat credit - shortage in the stock of finished goods in respect of sponge iron, shortage of 34.200 MT, involving cenvat credit of Rs. 50,791/- show cause notice was issued to the respondent for confirmation of duty demand on shortage of 34.200 MT of sponge iron under Rule 3(4) & 7(4) of the Cenvat Credit Rules, 2002 alongwith interest and also for imposition of penalty on the respondent under Rule 13 of Cenvat Credit Rules, 2002 read with Section 11AC of Central Excise Act, 1944 - Supreme Court in the case of Rajasthan Spinning & Weaving Mills Ltd reported in (2009 -TMI - 33419 - SUPREME COURT OF INDIA) and that in this case, when the elements of imposition of penalty under Section 11AC are present, there is no discretion left with the adjudicating authority and the penalty has to be imposed decided in favor of revenue.
Issues:
1. Confirmation of duty demand on shortage of sponge iron under Cenvat Credit Rules, 2002. 2. Imposition of penalty on the respondent under Cenvat Credit Rules, 2002. 3. Setting aside of penalty by the Commissioner (Appeals). 4. Appeal against the order of the Commissioner (Appeals) by the Revenue. 5. Cross objection filed by the respondent. Analysis: 1. The case involved a confirmation of duty demand on a shortage of 34.200 MT of sponge iron under Rule 3(4) & 7(4) of the Cenvat Credit Rules, 2002. The respondent, a manufacturer of M.S. Ingots, admitted the shortage and paid the central excise duty amounting to Rs.50,791. The Assistant Commissioner confirmed the duty demand and imposed a penalty equal to the duty amount. The Commissioner (Appeals) upheld the demand but set aside the penalty, citing judgments of the Supreme Court and High Court. The Revenue appealed against the penalty setting aside. 2. The imposition of the penalty under Rule 13 of Cenvat Credit Rules, 2002 was contested. The Departmental Representative argued that the shortage of sponge iron was significant, and the explanation provided by the respondent regarding wrong recording of weight was not convincing. He contended that the absence of evidence of clandestine removal was not a valid argument against imposing the penalty, emphasizing that the duty payment prior to the show cause notice did not warrant penalty waiver. 3. The Commissioner (Appeals) had set aside the penalty based on the payment of duty before the show cause notice and lack of corroborative evidence for clandestine removal. However, the Tribunal disagreed with this decision, stating that the shortage of sponge iron and the explanation provided were not satisfactory. The Tribunal found that the judgments relied upon by the Commissioner (Appeals) were no longer applicable in light of subsequent judgments by higher courts, leading to the restoration of the original duty demand and penalty. 4. The Revenue's appeal against the order of the Commissioner (Appeals) was allowed, overturning the decision to set aside the penalty. The Tribunal emphasized the significant shortage of sponge iron and the lack of credible explanation provided by the respondent, ultimately reinstating the duty demand and penalty initially imposed by the Assistant Commissioner. 5. The cross objection filed by the respondent was also disposed of in line with the Tribunal's decision to reinstate the duty demand and penalty, highlighting the importance of compliance with the Cenvat Credit Rules, 2002 in cases of shortages and discrepancies to prevent potential misuse or evasion of excise duty.
|
