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2017 (9) TMI 407 - AT - Central ExciseCENVAT credit - penalty - rejected inputs - credit availed on xerox copies of invoice - case of appellant is that the unit is closed and he may not be able to produce original invoice for availment of CENVAT credit - Held that - Availment of CENVAT credit on the xerox copy of the invoice seems to be totally irregular and appellant is not able to explain the situation which led to availment of CENVAT credit on the xerox copies of invoices - Keeping in mind that there are no detailed finding as to erroneous availment of CENVAT credit on the rejected inputs and how it has to be attended to, the equivalent amount of penalty imposed by the lower authorities seems to be excessive - penalty is reduced to ₹ 1,00,000/-. Non-payment of central excise duty on the goods manufactured and cleared under job work - it is the claim of the appellant that they were functioning under the provisions of N/N. 214/86 that mandates that the recipient of goods is the manufacturer, on whom the duty liability arises - penalty - Held that - learned counsel is not able to produce the declaration under Notification No. 214/86, which has to be filed along with acceptance of the job work with the jurisdictional authorities. In the absence of any such declaration, in my view the penalty imposed by the lower authority seems to be correct - penalty upheld. Penalty u/r 25 - Held that - there being contravention of the provisions of CER, 2002, imposing penalty under Rule 25 is correct, however, keeping in mind the factual submissions that the appellant s unit is closed, the ends of natural justice will be met if the penalty imposed for this issue of contravention of Central Excise Rules 2002 is reduced to ₹ 75,000/-. Appeal allowed - decided partly in favor of appellant.
Issues:
1. Availment of ineligible CENVAT credit on rejected inputs and xerox copies of invoices. 2. Non-reversal of CENVAT credit on rejected goods. 3. Non-payment of central excise duty on goods manufactured and cleared under job work. 4. Equivalent penalties imposed under Rule 15 of the CENVAT Credit Rules 2002. Issue 1: Availment of ineligible CENVAT credit on rejected inputs and xerox copies of invoices The audit party found errors in the appellant's records, including non-reversal of CENVAT credit on rejected inputs, 100% CENVAT credit on capital goods, and credit availed on xerox copies of invoices. The appellant admitted the errors and paid the due amounts along with interest. The Tribunal found the appellant availed ineligible CENVAT credit on xerox copies of invoices, which was improper. The appellant failed to produce original invoices to support the credit availed. The adjudicating authority correctly held the credit availed on xerox copies as irregular. The Tribunal reduced the penalty imposed under Rule 5 of the CENVAT Credit Rules to ?1,00,000, considering the lack of detailed findings on the erroneous availment of CENVAT credit on rejected inputs. Issue 2: Non-reversal of CENVAT credit on rejected goods The appellant failed to reverse the CENVAT credit on rejected goods due to missing details on the invoices. The Tribunal noted that without proper details, the reversal of input credit should be covered under Section 11A(2)(B) of the Central Excise Act 1944. The appellant's inability to provide necessary details led to the conclusion that the reversal of credit was justified. The penalty imposed by the lower authorities was considered excessive, and the Tribunal reduced it to ensure the ends of justice were met. Issue 3: Non-payment of central excise duty on goods manufactured and cleared under job work The appellant did not discharge the duty liability on goods manufactured and cleared under job work, claiming that the duty liability rested with the recipient of the goods as per Notification No. 214/86. However, the appellant failed to produce the required declaration under the notification. The penalty imposed under Rule 25 of the Central Excise Rules 2002 was deemed appropriate due to the contravention of the rules. The Tribunal reduced the penalty to ?75,000, considering the appellant's closed unit and ensuring natural justice. Issue 4: Equivalent penalties imposed under Rule 15 of the CENVAT Credit Rules 2002 The appellant contested the penalties imposed by the adjudicating authority under Rule 15 of the CENVAT Credit Rules 2002. The Tribunal found the penalties excessive and reduced them to ?1,00,000 for one issue and ?75,000 for another issue. The impugned order was upheld with modifications to the penalties, and the appeal was disposed of accordingly. This detailed analysis of the judgment highlights the errors found, penalties imposed, and the Tribunal's considerations in determining the appropriate penalties for the contraventions of the CENVAT Credit Rules and Central Excise Rules.
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