2011 (4) TMI 907 - AT - Central Excise

Wrongly utilized Cenvat credit twice - Penalty u/r 13 of the Cenvat Credit Rules, 2002 - Held that - As decided in Amrit Foods Vs. CCE, UP (2005 (10) TMI 96 - SUPREME COURT OF INDIA) that in the absence of specific clause of Rule alleging the contravention, penalty is not imposable under Rule 13 of the Cenvat Credit Rules, 2002. Thus going through the show-cause notice as well as the adjudication order no specific clause of Rule 13 of Cenvat Credit Rules, 2002 has been proposed or put on notice to the appellants to exact nature of contravention, therefore no penalty is leviable - in favour of assessee.

Summary

Issues:
Appeal against penalty under Rule 13 of the Cenvat Credit Rules, 2002.

Detailed Analysis:
1. Imposition of Penalty: The appellants challenged the penalty imposed under Rule 13 of the Cenvat Credit Rules, 2002, for allegedly wrongly availing Cenvat credit and utilizing it twice, as well as availing credit of Basic Excise Duty and Additional Excise Duty. The department pointed out the irregularities, and the appellants paid the duty demand with interest. Subsequently, a show-cause notice was issued proposing the penalty.

2. Reduction of Penalty: The adjudicating authority initially imposed a penalty of Rs.12,55,342. Upon appeal, the first appellate authority observed that the irregular credit availed was only Rs.84,167, leading to a reduction of the penalty to Rs.80,000. Dissatisfied with this decision, the appellants appealed further.

3. Legal Arguments: The appellant's advocate contended that since no specific provision of Rule 13 was cited to penalize the appellants, relying on the Amrit Foods case, it was argued that in the absence of a specific clause alleging contravention, penalty under Rule 13 was not applicable. On the contrary, the Departmental Representative argued that penalties are justified for contraventions of rules, citing the Punjab Tractors case to support this stance.

4. Judicial Review: The Tribunal examined the arguments presented by both sides, referencing the decisions in the Punjab Tractors and Amrit Foods cases. The Tribunal noted that while the Punjab Tractors case upheld penalties for rule violations, the Amrit Foods case emphasized the necessity of explicitly mentioning the contravention clause in the show-cause notice. Upon reviewing the show-cause notice and adjudication order, the Tribunal found no specific reference to Rule 13, as required by the Amrit Foods precedent.

5. Decision: Based on the absence of a specific clause in the show-cause notice regarding the contravention under Rule 13, the Tribunal followed the Amrit Foods ruling and concluded that no penalty was applicable in this case. Consequently, the impugned order imposing the penalty was set aside, and the appeal was allowed with any necessary consequential relief.

This detailed analysis of the judgment highlights the legal arguments, precedents cited, and the Tribunal's reasoning leading to the decision to set aside the penalty under Rule 13 of the Cenvat Credit Rules, 2002.