2017 (9) TMI 874 - AT - Central Excise

CENVAT credit - Clearance of CENVAT credit availed Capital Goods without payment of duty - Rule 3(5) of CENVAT Credit Rules, 2004 - Penalty u/s 11AC of CEA, 1944, read with Rule 15(2) of the CCR, 2004 - Held that - There is no dispute that appellant had not discharged the duty liability at the time of clearance capital goods cleared from the factory and duty liability was discharged only on being pointed out - this act of appellants is gross violation of the provisions of the law with intent to evade duty - penalty upheld - appeal dismissed - decided against appellant.

Summary

Issues:
- Appellant cleared CENVAT credit availed Capital Goods without payment
- Lease agreements with other manufacturers for capital goods
- Removal of capital goods without payment of required amount
- Show cause notice for reversal of CENVAT credit, interest, and penalties
- Confirmation of demand, interest, and penalties by adjudicating authority
- Appeal against penalties imposed
- Dispute over penalties imposed by adjudicating authority
- Calculation of duty liability and penalties
- Allegation of removal of capital goods without raising invoice
- Time-barred notice and invoking extended period
- Suppression of removal of capital goods
- Upholding of adjudicating authority's findings

Analysis:
The case involved the appellant clearing CENVAT credit availed Capital Goods without payment, through lease agreements with other manufacturers. The officers discovered that the appellant had transferred physical possession and control over the capital goods to lessees, leading to the utilization of these goods for manufacturing excisable items. The adjudicating authority issued a show cause notice for reversal of CENVAT credit, interest, and penalties due to the removal of capital goods without payment. The authority confirmed a demand of a specific amount, imposed penalties, and demanded interest under relevant sections of the Central Excise Act, 1944.

The appellant contested the penalties imposed, arguing that they had paid the duty liability upon finalizing prices. However, the departmental representative supported the adjudicating authority's findings, emphasizing the appellant's awareness of the law due to operating in an organized sector. The adjudicating authority upheld the penalties imposed, citing detailed reasoning for the confirmation of demand, interest, and penalties. The authority highlighted the appellant's failure to discharge duty liability promptly and deemed their actions as a gross violation of the law with the intent to evade duty.

Regarding the time-barred notice and invoking the extended period, the authority found that the appellant had suppressed the removal of capital goods without following proper procedures. The authority concluded that there was clear malafide intention on the part of the appellant, justifying the penalties imposed under Section 11AC of the Central Excise Act, 1944. Ultimately, the appellate tribunal upheld the adjudicating authority's decision, rejecting the appeal as devoid of merits and affirming the correctness and legality of the impugned order.