2012 (10) TMI 931 - AT - Central Excise

Availment of CENVAT Credit twice on the same invoice - Imposition of penalty on the party under Rule 15(2) of the CENVAT Credit Rules, 2004 read with Section 11AC of the Central Excise Act - first appellate authority reduced penalty - Whether, on the facts of this case, any penalty was liable to be imposed at all on the respondent - Held that - neither the date of receipt of the Order-in-Original nor the claim of payment of 25% as penalty within 30 days from the said date was disputed by the Commissioner (Appeals) but yet, regardless of the provisions of Section 11AC of the Central Excise Act, the appellate authority chose to tinker with the quantum of penalty. Respondent did pay 25% of duty as penalty within 30 days from the date of receipt of the Order-in-Original, there is no question of payment of any further amount of penalty vide the 1st proviso to Section 11AC of the Act. The counsel for the respondent had filed a copy of letter dt. 06/01/2010 addressed to the Deputy Commissioner of Central Excise, Guntur Division, which appears to have been received by his Superintendent on 07/01/2010. This letter states that 25% of duty was paid as penalty on 05/01/2010, i.e. within 30 days from 24/12/2009, the date of receipt of the Order-in-Original. This letter is also accompanied by the tax payer s counterfoil indicating remittance of Rs.43,497/-. This payment is found to have been noted in the impugned order but, in the context of dealing with the penalty-related issue, the learned Commissioner(Appeals) overlooked the relevant provisions of Section 11AC of the Act. Today there is no valid contest to the respondent s claim of having paid 25% of the duty as penalty within 30 days from the date of receipt of the Order - Decided against Revenue.

Summary

Issues:
1. Double availing of CENVAT credit on the same invoice.
2. Imposition of penalty under Rule 15(2) of the CENVAT Credit Rules, 2004 read with Section 11AC of the Central Excise Act.
3. Reduction of penalty by the first appellate authority.
4. Appeal against the reduction of penalty by the Department.

Analysis:
1. The respondent had mistakenly taken CENVAT credit twice on the same invoice, which was discovered during an audit by the Department. A show-cause notice was issued seeking recovery of the irregularly availed credit and imposition of penalty. The respondent claimed to have reversed the credit with interest before the notice was issued, arguing against the penalty imposition due to a clerical mistake. The original authority imposed a penalty equal to the credit amount, which was later reduced by the first appellate authority. The Department appealed to restore the penalty to the original level.

2. The main issue debated was whether any penalty was warranted on the respondent. It was revealed during the hearing that the respondent had paid 25% of the penalty under protest within 30 days of receiving the Order-in-Original. The Commissioner (Appeals) did not dispute this payment but still altered the penalty amount. As per Section 11AC of the Central Excise Act, if 25% of the penalty is paid within 30 days, no further penalty is required. The respondent provided evidence of payment within the stipulated time, which was overlooked by the appellate authority.

3. The respondent submitted a letter and counterfoil indicating the payment of 25% of the duty as penalty within the specified timeframe. Despite this evidence, the Commissioner (Appeals) failed to consider the provisions of Section 11AC while dealing with the penalty issue. As there was no valid challenge to the respondent's claim of timely payment, the appeal of the Department was dismissed, upholding the reduction of penalty by the appellate authority.

In conclusion, the judgment dismissed the Department's appeal, emphasizing the importance of complying with penalty payment provisions outlined in the Central Excise Act and upholding the reduction of penalty based on the timely payment made by the respondent.