2015 (9) TMI 198 - AT - Central Excise

Recovery of CENVAT Credit - CENVAT Credit on cylinders used in transporting various gases - capital goods - Held that - There is no allegation of suppression of facts in availing CENVAT Credit on the cylinders during the relevant period. Needless to mention that the appellant while claiming CENVAT Credit on these cylinders as capital goods, disclosed all the facts to the Department. Hence, imposition of penalty under sub-rule (2) of Rule 13 of CENVAT Credit, in my opinion is unwarranted. However, it cannot be denied that they have contravened the provisions of CENVAT Credit Rules in availing the CENVAT credit on cylinders. Hence, the present facts fall under the category of sub-rule (1) of rule 13 of CENVAT Credit Rules, 2002. Consequently, the appellant is liable to pay penalty under the said rules and the maximum penalty imposable is ₹ 10,000/-. Consequently, the impugned order is set aside - Decided in favour of assessee.

Summary

Issues:
Appeal against order-in-appeal, availing CENVAT Credit on cylinders, remand order by Tribunal, imposition of penalty under Section 11AC of CEA, 1944, dispute over penalty imposition under Rule 13 of CENVAT Credit Rules.

Analysis:
The appeal was filed against an order-in-appeal regarding availing CENVAT Credit on cylinders used for transporting gases. The Tribunal had remanded the matter for de novo adjudication to determine if the credit on cylinders could be admissible as inputs. The adjudicating authority, after reevaluation, dropped a portion of the demand and imposed a penalty under Rule 13 of CENVAT Credit Rules along with Section 11AC of CEA, 1944. Both the Revenue and the appellant appealed the decision, leading to the present appeal.

During the appeal, the appellant contested the penalty imposition, arguing that they had initially claimed the credit on cylinders as capital goods under a genuine belief. They later realized the credit should have been treated as input, providing necessary evidence during the remand proceeding. The appellant accepted liability for the credit related to exempted gases and reversed it. The appellant argued that the penalty under Section 11AC was unjustified, requesting its removal.

On the contrary, the Revenue contended that the appellant contravened Rule 3 of CENVAT Credit Rules by availing credit on cylinders used for transporting duty-exempt gases. Therefore, they argued that the penalty under Rule 13 of CENVAT Credit Rules and Section 11AC of CEA, 1944 was warranted.

After hearing both sides and reviewing the records, the Tribunal found that the appellant had availed credit on cylinders used for both dutiable and exempted gases. The Tribunal acknowledged that the appellant rectified their claim during the remand process and provided evidence to support it. While there was no allegation of suppressing facts, the Tribunal concluded that the appellant had contravened the CENVAT Credit Rules. The penalty under Rule 13(1) of CENVAT Credit Rules was deemed appropriate, with a maximum penalty of Rs. 10,000 imposed. Consequently, the Tribunal set aside the equivalent penalty and imposed Rs. 10,000 as the penalty under Rule 13(1) of CENVAT Credit Rules, 2004, disposing of the appeal accordingly.