2022 (6) TMI 1178 - AT - Central Excise

Levy of penalty - wrong availment of CENVAT credit - suppression of fact or not - voluntary reversal of the amount - period July 2009 to July 2010 - HELD THAT - The Adjudicating Authority imposed a penalty under section 11 AC on the basis of a proposal made in the SCN under Rule 15 read with section 11 AC. During the relevant period there was no such provision for penalty in respect of wrong availment of cenvat credit on input services. Therefore during the relevant period the penalty was not imposable either under Rule 15 (1) 15(2) or 15 (4). Rule 15(4) was made for service providers whereas the appellant is the manufacturer. Penalty set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
Imposition of penalty under section 11 AC of the Central Excise Act, 1944 for wrong availment of cenvat credit on input services during the period July 2009 - July 2010.

Detailed Analysis:

1. Imposition of Penalty under Section 11 AC: The appellant challenged the imposition of penalty under section 11 AC of the Central Excise Act, 1944. The appellant argued that the penalty under section 15 of CCR, 2004 read with section 11 AC was proposed in the show-cause notice (SCN). The appellant contended that penalty under section 11 AC(1) (c) of the Act after 14.05.2015 was not applicable to the period in question, i.e., July 2009 - July 2010. The appellant highlighted that there was no provision for penalty under Rule 15 of CCR, 2004 during the relevant period for wrong availment of cenvat credit on input services. The appellant cited various judgments to support their argument, emphasizing that the penalty under Rule 15(4) of CCR, 2004 was not applicable to manufacturers. The appellant also argued that there was no suppression of facts as the credit was duly reflected in the ER-1 return.

2. Legal Precedents: The appellant relied on several legal precedents to strengthen their case, including judgments such as Commr. of CEX Mumbai IV v/s GTC Industries Ltd, Coca cola India Pvt Ltd v/s Commr of CX Pune III, ABB Ltd & ORS v/s CCE & ST Banglore & Ors, Ultra tech Cement Ltd v/s Commr of CEX Bhavnagar, Commr of CEX Nagpur v/s Ultratech cement Ltd, Davangere Sugar Company, Oil and Natural Gas Corporation Ltd, Jitendra Synthetics, Crescent Manufacturing Pvt. Ltd, and Union of India Vs. Rajasthan Spinning & Weaving Mills. These judgments were cited to argue against the imposition of penalty under section 11 AC for the period in question and to establish that there was no suppression of facts.

3. Adjudication and Decision: The Adjudicating Authority confirmed the penalty under section 11 AC, leading the appellant to appeal before the Commissioner (Appeals) Vadodara. The Commissioner (Appeals) upheld the penalty, prompting the appellant to file the present appeal before the Appellate Tribunal CESTAT AHMEDABAD. The Tribunal, after considering the submissions and perusing the records, found that there was no provision for penalty under Rule 15 of CCR, 2004 for wrong availment of cenvat credit on input services during the relevant period. Therefore, the penalty imposed under section 11 AC was set aside, and the appeal was allowed in favor of the appellant.

In conclusion, the judgment by the Appellate Tribunal CESTAT AHMEDABAD addressed the issue of penalty imposition under section 11 AC of the Central Excise Act, 1944 for wrong availment of cenvat credit on input services during a specific period. The Tribunal ruled in favor of the appellant, emphasizing the absence of a legal basis for imposing the penalty during the relevant period and citing legal precedents to support their decision.