2012 (10) TMI 3 - AT - Central Excise

Penalty for wrong availment under Rule 15(1) of Cenvat Credit Rules - Cenvat credit assessee availed Cenvat credit on the basis of certain invoices twice, which on being pointed out by the audit was reversed Held that - It is only for imposition of penalty equal to the wrongly availed Cenvat credit under the provisions of sub-rule (2) of Rule 15 read with Section 11AC of the Central Excise Act, 1944, that the mens rea is required to be proved - imposition of penalty equal to the Cenvat credit demand would not be justified and the same has to be reduced

Summary

Issues:
1. Availment of Cenvat credit twice on certain invoices.
2. Confirmation of Cenvat credit demand, interest, and penalty imposition.
3. Appeal against setting aside of interest and penalty by Commissioner (Appeals).

Analysis:
1. The case involves a dispute regarding the respondents, manufacturers of refrigerators, availing Cenvat credit twice on certain invoices during a specific period. The excess credit taken was later reversed upon audit observation.

2. The Assistant Commissioner, through an order-in-original, confirmed the Cenvat credit demand and imposed interest under Rule 14 of Cenvat Credit Rules, 2004, along with a penalty under Rule 15. Upon appeal to the Commissioner (Appeals), the Cenvat credit demand was upheld, but the interest and penalty were set aside.

3. The appeal by the Revenue against the setting aside of interest and penalty was based on the argument that the penalty under Rule 15(1) is attracted for wrong availment of Cenvat credit without the need to prove mens rea. The judgment of the Hon'ble Supreme Court in a similar case was cited to support this argument.

4. The Tribunal, after considering the submissions, found that there was no dispute regarding the wrong availment of Cenvat credit. The Tribunal held that the Commissioner (Appeals) erred in setting aside the interest and penalty, as the law does not require proving mens rea for imposing penalty under Rule 15(1).

5. Consequently, the Tribunal set aside the Commissioner (Appeals)'s order regarding interest and penalty, restoring the original Adjudicating Authority's decision. However, considering the circumstances, the penalty under Rule 15(1) was reduced to Rs. 20,000, as imposing a penalty equal to the Cenvat credit demand was deemed unjustified.

6. In conclusion, the Tribunal disposed of the Revenue's appeal by reinstating the Cenvat credit demand, setting aside the interest and penalty, and reducing the penalty amount under Rule 15(1) of the Cenvat Credit Rules, 2004.