2017 (9) TMI 446 - AT - Central Excise

Confiscation of capital goods - redemption fine - penalty - Rule 15 (2) of CCR, 2004 - it was alleged that appellant had availed excess credit on capital goods - Held that - the appellant has availed the Cenvat credit third time which they are not supposed to do so, against the capital goods received by them, a fact evidenced once the appellant has reversed the said amount on 31.07.2008, on being pointed out by audit party, hence the reversal of Cenvat credit is rightly upheld - confiscation upheld - redemption fine seems to be on higher side and is reduced to ₹ 2.00 lakhs. As regards the penalty imposed under provisions of Rule 15 (2) of CCR 2004, the said provision may not be applicable in the case in hand - the appellant had no intention to avail this Cenvat credit with intention to evade duty. The existence of intention to evade duty is primary requirement for invoking provisions of rule 15 (2) of CCR, 2004 - penalty set aside. Appeal allowed - decided partly in favor of appellant.

Summary

Issues:
Confiscation of capital goods, redemption fine, imposition of penalty under Rule 15(2) of Cenvat Credit Rules, 2004.

Confiscation of Capital Goods and Redemption Fine:
The appellant availed excess credit in February 2008, which was noticed as the credit was availed a third time despite being availed twice before. A show cause notice was issued for demanding balance interest, confiscating capital goods, imposing a penalty, and a redemption fine. The adjudicating authority confirmed the demand, imposed a penalty, and redemption fine. The first appellate authority upheld the decision but dropped the interest liability. The Tribunal noted that the appellant availed credit for the third time against received capital goods, which was reversed upon audit party's pointing out. The Tribunal upheld the reversal of Cenvat credit and found no interference necessary in the first appellate authority's decision. However, the redemption fine was reduced to ?2.00 lakhs due to the appellant's reversal of credit.

Imposition of Penalty under Rule 15(2) of Cenvat Credit Rules, 2004:
The Tribunal examined the appellant's appeal contesting the penalty under Rule 15(2) of Cenvat Credit Rules, 2004. The appellant argued that the excess credit was not utilized for discharging duty and that there was no intention to evade duty. Documentary evidence showed a closing balance of approximately ?70.00 lakhs and a monthly utilization of around ?3.00 lakhs. The Tribunal found that the alleged violation did not indicate an intention to evade duty, which is a primary requirement for invoking Rule 15(2). Consequently, the Tribunal concluded that Rule 15(2) would not apply in this case and set aside the penalty imposed under this provision, allowing the appeal on this point.

Conclusion:
The Tribunal disposed of the appeal by upholding the confiscation of capital goods, reducing the redemption fine, and setting aside the penalty imposed under Rule 15(2) of Cenvat Credit Rules, 2004.