2013 (12) TMI 167 - AT - Central Excise

Penalty u/s 11AC r.w. Rule 15 of the Cenvat Credit Rules, 2004 - transfer of capital goods to other unit without reversing cenvat credit Held that - The entire case can be decided on the question of revenue neutrality - it is not disputed that the capital goods on which credit was availed was transferred/cleared for the purpose of doing job work to the appellant s own unit - there is no dispute as two of the units being the same i.e. M/s. Patel Alloys (Steel) (P) Ltd. - if the appellant s other units have taken the credit of the capital goods and subsequently reversed the same and credit has been taken - this itself would prove that the appellant s other units were registered with Central Excise Authority - the entire issue is revenue neutral - the ground of revenue neutral is a strong ground for setting aside any penalty imposed on the appellant as there cannot be any intention to evade duty - Penalty u/s 11AC read with provisions of Rule 15 of the Cenvat Credit Rules, 2004 directed to be waived Decided in favour of Assessee.

Summary

Issues:
- Imposition of penalty under Section 11AC of the Central Excise Act, 1944 read with Rule 15 of the Cenvat Credit Rules, 2004.

Analysis:
1. The appellant availed Cenvat credit on capital goods procured in 2005-06 and 2006-07, following a specific procedure. A show cause notice was issued due to capital goods not being returned to the appellant's unit within 180 days. The Additional Commissioner confirmed demands and penalties. The first appellate authority rejected the appeal, leading to the matter being remanded back to the Commissioner (Appeals) by the Tribunal. The Commissioner (Appeals) upheld the penalty of Rs. 8,25,450 imposed on the appellant.

2. The appellant argued that the penalty was unjustified as the capital goods were transferred to their own units within the same Commissionerate, and the sister units were registered with the Central Excise Authority. The appellant maintained that there was no intention to evade duty, emphasizing revenue neutrality. The Revenue contended that the procedures under the Cenvat Credit Rules were not followed by the appellant.

3. The Tribunal analyzed the case considering the issue of upholding the penalty under Section 11AC of the Central Excise Act read with Rule 15 of the Cenvat Credit Rules. It was established that the appellant correctly availed Cenvat credit on the capital goods and transferred them to their sister units within the same Commissionerate. The Tribunal noted that the appellant had provided evidence of the sister units being their own units and that the issue could be decided based on revenue neutrality.

4. The Tribunal found that since the capital goods were transferred for job work to the appellant's own units, there was no evasion of duty. The Tribunal agreed with the appellant's argument that the entire issue was revenue neutral, as the units involved were registered with the Central Excise Authority. Consequently, the Tribunal set aside the penalty imposed on the appellant under Section 11AC and Rule 15 of the Cenvat Credit Rules.

5. In conclusion, the Tribunal allowed the appeal, setting aside the impugned order and the penalty imposed on the appellant. The decision was based on the principle of revenue neutrality and the lack of intention to evade duty in the case at hand. The judgment was pronounced on 19-4-2013 by the Tribunal.