2017 (2) TMI 1170 - AT - Central Excise

CENVAT credit - penalty on the ground that the appellant had wrongly reversed 8%/10% on the value of intermediate exempted product i.e. Ether Solvent Tech and not on the value final exempted product i.e. Ether Anaesthetics IP/BP - whether penalty of ₹ 1,00,000/- confirmed under Rule 15 of CCR 2004 is justified when the amount has already been paid and not disputed - Held that - in absence of any suppression mis-declaration, misstatements, etc. when penalty u/s 11AC of CEA,1944 on the appellant is set aside, and no sub-rule u/r 15 of CCR, 2004 is specified in confirming penalty, penalty imposed under the said Rule cannot be sustained - Further, in absence of any other penal provision invoked in the SCN and imposed on the appellant in the impugned Orders, penalty cannot be imposed on the appellant. Appeal allowed - decided in favor of appellant.

Summary

Issues: Appeal against confirmation of demand and penalty imposition under Rule 15 of CCR 2004.

Issue 1: Confirmation of demand for differential amount between exempted intermediate and final products.
The appellant, engaged in pharmaceutical products manufacturing, availed CENVAT credit on inputs for both dutiable and exempted products. They reversed 8%/10% on the value of exempted intermediate product, Ether Solvent Tech, used in manufacturing final exempted product, Ether Anaesthetics IP/BP. The department demanded the differential amount between these products for the period 2003-2006. The Commissioner (Appeals) partly upheld the demand for the normal limitation period, reducing the penalty. The appellant contended that the penalty under Rule 15 read with Section 11 AC was unwarranted as no facts were suppressed. The Tribunal noted the discrepancy in the demand and the amount paid, leading to the conclusion that the penalty imposed was not justified due to lack of mis-declaration or suppression.

Issue 2: Justification of penalty imposition under Rule 15 of CCR 2004.
The Tribunal analyzed the facts and evidence, finding that the penalty of ?1,00,000 confirmed under Rule 15 of CCR 2004 was not appropriate, especially when the amount had already been paid and was not disputed by the appellant. The Commissioner (Appeals) had reduced the penalty but initially proposed and confirmed an equal penalty under Rule 15 of CCR 2004, along with Section 11AC of the Central Excise Act, 1944. As there was no suppression or misstatement by the appellant, the penalty under Section 11AC was set aside. Since no specific sub-rule under Rule 15 of CCR 2004 was cited for confirming the penalty, the Tribunal held that the penalty imposed under this rule could not be sustained. Furthermore, as no other penal provision was invoked in the show cause notice or the impugned orders, the Tribunal concluded that the penalty could not be imposed on the appellant.

In conclusion, the Tribunal set aside the impugned order regarding the penalty of ?1,00,000 imposed on the appellant, disposing of the appeal accordingly.