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2013 (10) TMI 261 - AT - Central ExcisePenalty u/s 11AC - Whether under Section 11AC of the Central Excise Act assesses were liable to be penalized - Assesse had removed a Horizontal Cold Chamber Pressure Die Casting Machine (which had been purchased on which CENVAT credit had been taken to another unit without reversing the credit - Held that -The assesse had tacitly admitted their liability to have reversed the CENVAT credit at the time of removal of the capital goods - They also voluntarily paid interest u/s 11AB - These payments cannot be accepted as payments under sub-section 2B of Section 11A of the Act inasmuch as these were made under compulsion - the question of invoking Explanation 3 ibid does not arise. Penalty u/s 11AC of the Central Excise Act read with Rule 15(2) of the CENVAT Credit Rules, 2004 - Held that - The penalty was unquestionable in the case The grounds for invoking the extended period of limitation were identical to the grounds for invoking Section 11AC - where mens rea stands accepted in relation to the demand of duty, it had to be accepted by the assesse vis-vis the proposal for imposition of penalty under Section 11AC - If that be so, where the demand had not been contested on the ground of limitation - it was not open to the assessee to oppose the Section 11AC penalty. Extended Period of Limitation u/s 11A(1) of the Act - Held that - The assesse did not choose to contest the demand on the ground of limitation, thereby virtually accepting the allegation of suppression - It was not in dispute that the show-cause notice invoked the extended period of limitation on the ground of suppression of facts with intent to avail undue CENVAT credit.
Issues:
1. Liability under Section 11AC of the Central Excise Act for failure to reverse CENVAT credit upon transferring capital goods. 2. Applicability of Rule 3(5) vs. Rule 4(5)(a) of the CENVAT Credit Rules, 2004. 3. Claim of revenue-neutrality and intent to avail undue benefit. 4. Contesting penalty imposition under Section 11AC based on grounds of limitation and mens rea. Analysis: Issue 1: The appeal questioned the penalization under Section 11AC of the Central Excise Act for transferring a Cold Chamber Pressure Die Casting Machine without reversing the CENVAT credit. The appellant admitted the transfer and subsequent payment of the credit amount with interest upon detection by the department. The penalty was contested based on the absence of intent to avail undue benefit. Issue 2: The appellant argued that Rule 4(5)(a) of the CENVAT Credit Rules, 2004 was applicable as the machine was transferred to another unit for job work and intended to be returned. However, the show-cause notice invoked Rule 3(5) and the appellant did not contest this in their reply. The tribunal noted that the appellant failed to substantiate their claim of the machine being returned within 180 days. Issue 3: The appellant claimed revenue-neutrality and absence of intent to avail undue benefit, citing previous cases. However, the tribunal found these arguments inapplicable as the appellant did not raise the revenue-neutrality claim before the original authority. The tribunal emphasized that the appellant tacitly admitted liability by paying the credit amount and interest. Issue 4: The tribunal highlighted that the appellant did not contest the demand on the ground of limitation, indicating acceptance of the allegation of suppression. As the grounds for invoking the extended period of limitation aligned with those for imposing the penalty under Section 11AC, the tribunal upheld the penalty, emphasizing the acceptance of mens rea in relation to the demand of duty. The tribunal dismissed the appeal, affirming the penalty under Section 11AC of the Central Excise Act due to the failure to reverse CENVAT credit upon transferring the capital goods, despite the appellant's arguments regarding revenue-neutrality and absence of intent to avail undue benefit.
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