2015 (10) TMI 709 - HC - Central Excise

Penalty u/s 11Ac - Held that - Section 11AC of the Central Excise Act, 1944, contemplates, penalty for short-levy or non-levy of duty in certain cases, i.e., where any duty of Excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, by the reason of fraud, collusion, any wilful misstatement; or suppression of facts or contravention of any of the provisions of the Act or of the rules made thereunder with intent to evade payment of duty. - From the records, it is observed that the assessee had availed the wrong credit in their account but has not utilized the same and after it was pointed out by the audit party the same was reversed by the assessee. In such circumstances, the Tribunal has rightly held that there was no intention on the part of the assessee to evade payment of tax and the assessee had not utilized the amount credited. - Revenue having failed to establish the case of imposing penalty under Section 11AC, we are not inclined to interfere with the order passed by the Tribunal and in the circumstances, we do not find any substantial question of law arising for consideration. - Decided against Revenue

Summary

Issues:
Challenge to penalty imposed by Commissioner of Central Excise under Cenvat Credit Rules, 2002 read with Section 11AC of the Central Excise Act, 1944.

Analysis:

1. The Department challenged the order of the Customs, Excise and Service Tax Appellate Tribunal vacating the penalty of Rs. 6,00,000 imposed by the Commissioner of Central Excise. The assessee was engaged in the manufacture and clearance of excisable goods and availed the benefit of Cenvat credit facility under Cenvat Credit Rules.

2. The Commissioner imposed the penalty after finding irregular availment of Cenvat credit by the assessee. The Tribunal, after examining the issue, held that there was no intention to evade payment of duty by the assessee. Hence, the Tribunal vacated the penalty, leading to the Department's appeal.

3. Section 11AC of the Central Excise Act, 1944, provides for penalties in cases of short-levy or non-levy of duty due to fraud, collusion, wilful misstatement, suppression of facts, or contravention of Act provisions with intent to evade payment. The Tribunal observed that the assessee had availed wrong credit but had not utilized it, reversing it upon audit party's identification.

4. The Tribunal rightly concluded that there was no intent to evade tax by the assessee as they did not utilize the wrongly availed credit. For penalty under Section 11AC, the Revenue must prove fraud, collusion, wilful misstatement, or suppression of facts, which was not evident in this case.

5. The main issue in the appeal was the lack of evidence to support penalty imposition under Section 11AC. The Court declined to interfere with the Tribunal's decision, stating that the Revenue failed to establish grounds for penalty imposition. Consequently, no substantial legal question arose for consideration, leading to the dismissal of the appeal.