2015 (10) TMI 870 - AT - Central Excise

Penalty under Rule 13 of the Cenvat Credit Rules 2002 readwith Rule 25 of the Central Excise Rules 2002 - whether penalty under Rule 13 of the Cenvat Credit Rules 2002 can be imposed less than Rs. 10, 000/- as imposed by the Adjudicating Authority and upheld by Commissioner (Appeals) - held that - From the above provisions of Rule 13 and Rule 25 of CCR and CER respectively it transpires that while imposing penalty the same should not exceed the duty on the excisable goods in respect of which any contravention has been committed or ten thousand rupees whichever is greater. Accordingly minimum penalty prescribed under the above provisions is Rs. 10, 000/-. Accordingly it is held that the penalty of Rs. 1, 000/-; imposed by the Adjudicating Authority under Rule 13 of the Cenvat Credit Rules 2002 readwith Rule 25 of the Central Excise Rules 2002 and upheld by Commissioner (Appeals); was not correct. In view of the above we set aside the orders passed by the lower authorities and allow the appeal filed by the Revenue by enhancing the penalty to Rs. 10, 000/-. - Decided in favour of Revenue.

Summary

Issues:
1. Imposition of penalty under Rule 13 of the Cenvat Credit Rules, 2002 for an amount less than Rs. 10,000.

Analysis:
The appeal was filed by the Revenue against the order of the First Appellate Authority upholding a penalty of Rs. 1,000 imposed by the Adjudicating Authority under Rule 13 of the Cenvat Credit Rules, 2002 read with Rule 25 of the Central Excise Rules, 2002. The Revenue argued that as per the provisions of Rule 13 of Cenvat Credit Rules and Rule 25 of Central Excise Rules, a penalty less than Rs. 10,000 cannot be imposed. The main issue revolved around whether a penalty less than Rs. 10,000 could be imposed under Rule 13 of the Cenvat Credit Rules, 2002.

Upon hearing the arguments, it was noted that there was no representation from the respondent during the proceedings. The Tribunal examined the provisions of Rule 13 of the Cenvat Credit Rules, 2002 and Rule 25 of the Central Excise Rules, 2002. Rule 13 specifies that the penalty should not exceed the duty on the excisable goods or Rs. 10,000, whichever is greater. Similarly, Rule 25 outlines penalties for contraventions, with a minimum penalty of Rs. 10,000. Therefore, it was concluded that the penalty of Rs. 1,000 imposed by the Adjudicating Authority and upheld by the Commissioner (Appeals) was incorrect.

In light of the above analysis, the Tribunal set aside the orders of the lower authorities and allowed the appeal filed by the Revenue by enhancing the penalty to Rs. 10,000. The judgment clarified that penalties under Rule 13 of the Cenvat Credit Rules, 2002 should not be less than Rs. 10,000, as prescribed by the relevant provisions.