2024 (3) TMI 634 - AT - Central Excise

Penalty imposed on them under Rule 15(2) of the CENVAT Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944 - appellant has taken CENVAT Credit on the strength of fake invoices, but the same was reversed along with interest - HELD THAT - In the case of THE COMMISSIONER OF CENTRAL EXCISE CUSTOMS SERVICE TAX VERSUS M/S. JUHI ALLOYS LTD., ANIL KUMAR SHUKLA 2014 (1) TMI 1475 - ALLAHABAD HIGH COURT , the issue before the Hon ble High Court of Allahabad was the availment of CENVAT Credit to the manufacturer whereas the invoices had been issued by the registered dealer which were found to be fake. Therefore, it was held that CENVAT Credit could not be denied. Further, in the case of M/S. RAJAN ENGINEERING WORKS VERSUS CCE, DELHI-IV, FARIDABAD 2011 (7) TMI 626 - CESTAT, DELHI . The demand in the said case was raised only on the basis of the statement of the input supplier, which is not the case in hand as, in this case, the appellant has admitted that they had taken the CENVAT Credit on the strength of fake invoices although it was not known to them; the same has been reversed along with interest and they are seeking immunity from the penalty imposed on them. As the appellant has already reversed the amount of CENVAT Credit along with interest and contesting the same, in these circumstances, we hold that penalty on the appellant is to be imposed at only 25% of the amount involved. Therefore, in terms of proviso to Section 11AC of the Act, the penalty on the appellant is reduced to 25% of the penalty imposed as the appellant has already reversed the CENVAT Credit along with interest. Appeal disposed off.

Summary

Issues:
The appeal against penalty under Rule 15(2) of the CENVAT Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944.

Facts of the Case:
The appellant had taken CENVAT Credit based on fake invoices issued to two companies. During investigation, it was revealed that the invoices were fake and no goods were actually moved. The appellant admitted to taking the credit but reversed it along with interest upon discovering the issue.

Adjudication and Appeal:
The CENVAT Credit was deemed inadmissible and recoverable from the appellant with interest. A penalty was also proposed. The penalty was confirmed under Rule 15(1) of the CENVAT Credit Rules, 2004. The Revenue appealed for a penalty under Rule 15(2) of the CENVAT Credit Rules, 2004, which was allowed, resulting in a penalty of Rs. 32,65,803. The appellant appealed against this decision.

Appellant's Argument:
The appellant argued that since they had reversed the CENVAT Credit along with interest, no penalty should be imposed. They cited relevant case law to support their contention.

Decision and Rationale:
The Tribunal noted that the appellant had admitted to taking credit based on fake invoices, which were later reversed with interest. The Tribunal differentiated this case from previous cases where CENVAT Credit was denied. The penalty was reduced to 25% of the amount involved, as the appellant had already reversed the credit along with interest. The appeal was disposed of accordingly.

Conclusion:
The penalty imposed on the appellant was reduced to 25% of the amount involved, as they had already reversed the inadmissible CENVAT Credit along with interest. The appeal was decided in favor of the appellant.