2018 (2) TMI 1552 - AT - Central Excise

Penalty u/r 15(2) of CCR 2004 - claim of appellant is that erroneous utilization of credit was inadvertent and without deliberate motive which would foreclose the invoking of extended period of limitation for recovery - Held that - No evidence has been placed on record by the appellant that the ingredients for invoking of section 11AC were not in existence - the lower authorities had no option but to impose a penalty as a direct consequence of duty - appeal dismissed - decided against appellant.

Summary

Issues: Appeal against order confirming demand of duty, penalty under CENVAT Credit Rules, 2004.

Issue 1: Demand of Duty and Penalty under CENVAT Credit Rules, 2004

The appeal was filed against the order-in-appeal dated February 4, 2015, upholding the demand of ?2,01,568 along with interest and penalty under rule 15(2) of CENVAT Credit Rules, 2004. The appellant had utilized duty credit under the Additional Duties of Excise Act, 1978, for goods not covered by the said Act, contrary to Rule 3(7)(b) of CENVAT Credit Rules, 2004. The appellant did not dispute the improper credit utilization but challenged the penalty, arguing that the error was inadvertent and without deliberate motive, thus not warranting the invoking of the extended period of limitation for recovery. The appellant contended that the demand should have been directed towards the duty payable on the finished goods, and the recovery of inadmissible CENVAT credit should not have been included if the extended period was to be invoked.

Issue 2: Imposition of Penalty

In the absence of any representation from the appellant, the learned Authorised Representative was heard, and the records were perused. The penalty was imposed under rule 15 of CENVAT Credit Rules, 2004, which relies on the statutory mechanism of section 11AC for implementation. The tribunal noted that the appellant failed to provide evidence that the conditions for invoking section 11AC were not met. Consequently, the lower authorities had no choice but to impose the penalty as a direct consequence of the duty liable for recovery under section 11A of the Central Excise Act, 1944. It was emphasized that no mitigating factor could reduce or waive the penalty, leading to the dismissal of the appeal.

In conclusion, the tribunal dismissed the appeal against the order confirming the demand of duty and penalty under the CENVAT Credit Rules, 2004. The penalty was upheld based on the statutory provisions, and the appellant's argument regarding inadvertent error in credit utilization was not considered a valid ground to foreclose the penalty imposition. The judgment highlighted the strict application of penalty provisions under the law, emphasizing that the existence of mitigating factors does not warrant a reduction or waiver of the penalty prescribed.