2010 (7) TMI 804 - AT - Central Excise

Penalty - Cenvat Credit - contravention of the provisions of Rule 9(2) - Held that - Appellants have taken cenvat credit on the strength of invoices against which the goods received in the factory of the appellants physically - as per Rule 9(2) ibid provides that if concerned officer is satisfied that the goods have been received in the factory then for the contravention of non mention of vehicle number is not to be held as contravention as per rule - Penalty set aside

Summary

Issues:
Appeal against penalty under Rule 15(1) of Cenvat Credit Rules, 2004 for contravention of Rule 9(2) regarding non-mention of vehicle number or mode of transportation on invoices.

Analysis:
The appellants appealed against the penalty imposed for contravening Rule 9(2) of Cenvat Credit Rules, 2004 by not mentioning vehicle details on some invoices. The show cause notice was issued based on this contravention, leading to the penalty under Rule 15(1) of Cenvat Credit Rules. The appellants argued that since they had taken credit on duty-paid invoices and physically received the goods, any contravention should be attributed to the supplier. They also contended that the penalty should have been imposed on the supplier, not them. The consultant cited precedents to support this argument and claimed that the appellants were not properly notified of the rule under which the penalty was imposed.

The Revenue, represented by the learned DR, maintained that the appellants had indeed contravened the rules by not including vehicle details on the invoices, rendering them ineligible for cenvat credit. The Revenue argued that the penalty was rightly imposed under Rule 15(1) as there was no allegation of fraud or intent to evade duty. The DR emphasized that the appellants were aware of the contraventions and should be penalized accordingly. Precedents were cited to support this stance.

After hearing both parties, the Tribunal deliberated on the issue of whether the appellants were liable to be penalized under Rule 15(1) of Cenvat Credit Rules. While the goods were physically received by the appellants, the invoices lacked transportation details. The Tribunal noted that the penalty provision applies when there is a contravention of rules leading to goods being liable for confiscation. Since the goods were not liable for confiscation in this case, the penalty was deemed inapplicable. The Tribunal distinguished the cited case laws where duty liability was confirmed, unlike the present scenario where the appellants had taken credit based on invoices and physically received the goods. Rule 9(2) allows for non-mention of vehicle details if goods are physically received, absolving the appellants of contravention. Consequently, the Tribunal set aside the penalty, allowing the appeal.

This detailed analysis of the judgment highlights the arguments presented by both parties, the legal principles applied by the Tribunal, and the reasoning behind setting aside the penalty imposed on the appellants.