2018 (1) TMI 1269 - HC - Central Excise

Penalty - suppression of facts - Rule 15(2) of the Cenvat Credit Rules, 2004 - Held that - Once the finding was that the short payment was for reasons of fraud, collusion or any mis-statement or suppression of facts particularly suppression which is apparent in this case then the Tribunal did not allow the appellant to canvass an argument that Rule 15(2) of the CCR 2004 is inapplicable. We see no perversity or error of law apparent on the face of the record in the reasoning of the Tribunal - imposition of equivalent or commensurate penalty cannot be said to be illegal or perverse - appeal dismissed.

Summary

Issues:
Imposition of penalty on the appellant assessee upheld; Contesting penalty on grounds of reversal of wrongly availed credit; Applicability of Rule 15(2) of Cenvat Credit Rules 2004; Comparison with LG Electronics Pvt. Ltd. case; Substantial questions of law raised in the appeal.

Analysis:
The High Court upheld the imposition of penalty on the appellant assessee, as per the order dated 17th March 2016. The Tribunal found that the assessee had engaged in acts not deemed inadvertent despite clear provisions of the Cenvat Credit Rules 2004. The Tribunal noted the appellant's awareness of the law and conditions for availing input credit, yet contested the penalty. The Tribunal rejected the argument that reversal of wrongly availed credit prior to the show cause notice could waive the penalty, emphasizing the deliberate nature of the acts. The Tribunal affirmed the Adjudicating Authority and Commissioner (Appeals) findings that the appellant was well-versed with the process, evident from the memo of appeal. The Tribunal dismissed the argument that Rule 15(2) of the Cenvat Credit Rules 2004 was inapplicable due to apparent suppression of facts leading to short payment.

The appellant relied on the LG Electronics Pvt. Ltd. case, where Rule 15 had no applicability in recovering short payments of duties. However, the Tribunal in the present case distinguished the LG Electronics case, stating that in situations where fraud, collusion, or misstatement exist, Rule 15(2) applies, leading to the imposition of penalties. The High Court found no substantial questions of law raised in the appeal, deeming it devoid of merits. The court concluded that the imposition of an equivalent or commensurate penalty was not illegal or perverse, resulting in the dismissal of the appeal without costs.