2007 (8) TMI 110 - AT - Central Excise

Penalty - Appellant has debited the credit which has wrongly taken along with mandatory penalty of 25% before issuance of SCN but revenue proposed for imposition of extra penalty u/s 11AC on appellant -No extra imposed of penalty were raised as per tribunal order

Summary

Issues:
1. Challenge to the order not imposing penalty under Section 11AC of the Central Excise Act, 1944.
2. Contention regarding fraudulent Cenvat Credit taken by the assessee.
3. Payment of Cenvat credit and penalty by the respondent.
4. Interpretation of the proviso to Section 11AC regarding penalty imposition.
5. Adjustment of penalty and duty paid by the respondent.

Analysis:
1. The Revenue contested the order of the Commissioner (Appeals) that upheld the decision of the adjudicating authority not to impose a penalty on the respondent under Section 11AC. The Tribunal referred to a previous case while dismissing the Revenue's appeal.
2. The adjudicating authority found that the Cenvat Credit was taken fraudulently by the assessee, which was admitted by the proprietor. The respondent did not contest the inadmissibility of credit but only the imposition of penalty under Section 11AC.
3. The respondent reversed the Cenvat credit amount and paid a penalty of 25% of the duty involved. The show cause notice mentioned the deposit of the wrongly availed Cenvat Credit along with the penalty.
4. The Tribunal noted that the respondent had paid the total amount along with the mandatory penalty, and the Assistant Commissioner refrained from imposing additional penalty under Section 11AC. The proviso to Section 11AC allowed for a reduced mandatory penalty of 25% of the duty determined, which was adjusted against the amounts already paid.
5. Due to the respondent availing the benefit of the proviso by making earlier deposits, only a penalty of 25% of the duty determined was imposable. The impugned order was modified based on this legal position, and the appeal was disposed of with the adjustment of the duty amount already paid, eliminating the need for further recovery.

This judgment provides a detailed analysis of the issues surrounding the imposition of penalties under Section 11AC of the Central Excise Act, emphasizing the interpretation of the proviso and the adjustment of penalties and duties paid by the respondent.