2009 (9) TMI 483 - AT - Central Excise

Penalty- Capital Goods- The appellant had wrongly taken Cenvat credit amounting to Rs.92,605/-. The taking of wrong credit had been pointed out by the Audit in course of audit of the appellant s record on 18-3-04 and the entire amount has been paid at that time along with interest. The Asstt. Commissioner vide Order-in- Original imposed penalty of Rs.92,605/- under Rule 13 of Cenvat Credit Rules, 2002/Rule 15 of Cenvat Credit Rules, 2004 read with Section 11AC of Central Excise Act, while neither the SCN makes duty demand nor any duty demand has been confirmed against the appellant in the order-in-original. On appeal against this order, the Commissioner (Appeals) upheld the Asstt. Commissioner s order. Held that- On going through the SCN and the adjudication order, I do not find any element of Section 11AC like wilful misstatement, fraud, suppression of fact, contravention of the provisions of Central Excise Act, 1944 or of the Rules made there under with intent to evade payment of duty etc. Moreover, I also find that neither the SCN demands any duty nor in the adjudication order any duty demand has been confirmed. In view of these circumstances, I am of the view that imposition of penalty was not justified. The impugned order, therefore, is not sustainable and the same is set aside. The appeal is allowed.

Summary

In the appellate tribunal CESTAT, New Delhi, Shri Rakesh Kumar, Member (T) presided over the case involving a show cause notice (SCN) issued to the appellant for wrongly taking Cenvat credit amounting to Rs. 92,605. The appellant was alleged to have contravened various provisions of the Cenvat Credit Rules during the period from December 2002 to February 2004. The Assistant Commissioner imposed a penalty of Rs. 92,605 under the Cenvat Credit Rules, but without confirming any duty demand. The Commissioner (Appeals) upheld this decision, leading to the present appeal.

During the hearing, the appellant's consultant argued that there was no duty demand in the SCN or the adjudication order, and thus, no basis for invoking Section 11 for penalty imposition. He contended that the credit wrongly taken was mainly related to capital goods, and the full amount had been repaid with interest as soon as the discrepancy was discovered. He also mentioned Section 11A(2B) of the Central Excise Act, stating that immediate repayment upon notification should preclude penalty proceedings.

The respondent's representative defended the penalty, citing the correct application of Rule 15 and Section 11AC for taking wrong Cenvat credit. He argued that the repayment was not voluntary and did not absolve the appellant of penalty.

After reviewing the arguments and evidence, the Member found that the penalty under Rule 13/15 read with Section 11 was not justified. The appellant had promptly repaid the disputed amount with interest upon discovery, and no elements of willful misstatement or fraudulent intent were present. As neither the SCN nor the adjudication order confirmed any duty demand, the penalty imposition was deemed unwarranted. The impugned order was set aside, and the appeal was allowed.