2012 (8) TMI 861 - AT - Central Excise

Denial of CENVAT credit - Penalty u/s 11AC - Credit had been taken on certain invoices without receipt of the inputs - Held that - The show-cause notice issued by the Department clearly attributed fraud to the appellant, which is one of the grounds under Section 11AC for imposition of penalty. The show-cause notice also invoked Rule 15 of the CENVAT Credit Rules, 2004 which expressly made Section 11AC applicable to a case of irregular and fraudulent availment of CENVAT credit. In this factual scenario, the appellant has no case against the penalty imposed under Section 11AC of the Central Excise Act, though they are entitled to the benefit of 1st proviso to Section 11AC of the Act. Indeed, the appellant has already availed themselves of this benefit by paying up 25% of the duty amount towards penalty under Section 11AC within the period prescribed under the said proviso - Decided against assessee.

Summary

Issues:
Challenge against penalty under Rule 15 of the CENVAT Credit Rules, 2004 read with Section 11AB of the Central Excise Act.

Analysis:
The appeal was filed against the appellate Commissioner's order regarding the appropriation of CENVAT credit on inputs, interest, and penalty under Rule 15 of the CENVAT Credit Rules, 2004 read with Section 11AB of the Central Excise Act. The appellant challenged only the penalty in the appeal. The demand of duty arose from the denial of CENVAT credit on inputs due to the credit being taken on invoices without actual receipt of the materials. The input suppliers admitted to not supplying the materials but only issuing invoices. The appellant accepted this factual situation, reversed the credit, and paid 25% of the duty as penalty under Section 11AC within the specified time. The appellant's conduct indicated acceptance of the applicability of Section 11AC. The grounds raised in the appeal were found to be inconsistent with the reality that the appellant had taken CENVAT credit without receiving the inputs, as alleged in the show-cause notice. The notice attributed fraud to the appellant, a ground for penalty under Section 11AC. The appellant had no case against the penalty imposed under Section 11AC, although they benefited from the 1st proviso to Section 11AC by paying 25% of the duty amount as penalty within the prescribed period.

The Tribunal noted that the appellant had already availed themselves of the benefit under the 1st proviso to Section 11AC by paying the penalty. The appeal was dismissed based on the factual scenario and the appellant's conduct in taking CENVAT credit without receiving the inputs, leading to the penalty under Section 11AC of the Central Excise Act. The judgment was pronounced and dictated in open court, resulting in the dismissal of the appeal.