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2019 (5) TMI 471 - HC - Central ExciseDefault in payment of duty - withdrawal of facility for fortnightly payment of duty and payment through RG 23A Part II for a period of two months or till the deposit of defaulted amount whichever was later - invocation of provisions of Rule 8(3A) of the Rules - HELD THAT - The Party had paid whole of the defaulted amount along with interest on 17.10.2001. Since the Party had made the whole of the dues within one month, therefore, they were entitled to utilize their cenvat credit account for payment of duty w.e.f. 24.11.2001. The Tribunal had noticed that the Party had not contravened the provisions of Rule 8(3A) of the Rules by utilizing the credit account for payment of duty w.e.f. 18.1.2002. Therefore, the demand of ₹ 1,69,38,241/- was set aside by the Tribunal and the Party was not liable to pay any penalty in this regard. No illegality or perversity could be pointed out by the learned counsel for the revenue in the aforesaid findings recorded by the Tribunal in all the three appeals which may warrant interference by this Court - the substantial questions of law are answered against the revenue and in favour of the assessee - appeal dismissed.
Issues Involved:
1. Reduction of penalty amount for fraudulent credit entries in PLA. 2. Allowance of Cenvat Credit utilization and penalty waiver. 3. Personal penalty reduction for employees involved in fraudulent activities. Issue 1: Reduction of penalty amount for fraudulent credit entries in PLA The appellant filed an appeal under Section 35G of the Central Excise Act, 1944, challenging the penalty reduction by the Customs, Excise and Service Tax Appellate Tribunal. The Tribunal observed that the Party had manipulated their account current by taking credit entries in their PLA without actually depositing the amount through TR-6 challan. The Tribunal reduced the penalty to 25% of the fraudulently taken credit amount of ?1,63,00,000 and directed the Party to pay the reduced penalty within 30 days. The Tribunal justified the penalty reduction based on the Party's payment of the defaulted amount along with interest before the issuance of the show cause notice. Issue 2: Allowance of Cenvat Credit utilization and penalty waiver The Party, engaged in the manufacture of aerated waters, was found to have utilized Cenvat Credit wrongly for duty payment without clearing the defaulted amount as per the Central Excise Rules. The adjudicating authority confirmed demands and imposed penalties under Section 11AC of the Act. However, the Tribunal set aside the demand of ?1,69,38,241 and waived the penalty. The Tribunal reasoned that after making the defaulted payment, the Party was entitled to utilize their Cenvat Credit account for duty payment. Therefore, the demand and penalty related to Cenvat Credit utilization were set aside by the Tribunal. Issue 3: Personal penalty reduction for employees involved in fraudulent activities The Tribunal confirmed personal penalties of ?50,000 each on the two employees of the Party who were instrumental in the fraudulent activities. The Tribunal considered the employees' admission of mistake and their roles in the company. The Tribunal opined that imposing nominal penalties on the responsible officials would meet the ends of justice. The Tribunal's decision to reduce the personal penalties was based on the employees' admission of mistake and their roles in the fraudulent activities. In conclusion, the High Court upheld the Tribunal's findings and dismissed the appeals by the revenue. The Court found no illegality or perversity in the Tribunal's decisions on the substantial questions of law, ruling in favor of the assessee and against the revenue.
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