2009 (9) TMI 499 - AT - Central Excise

Penalty- The relevant facts that arise for consideration are that one M/s. Thir ven Steels Pvt. Ltd. holders of Central Excise registration having their factory at Venkatarajampet Village, Rajampet Mandal, Kadapa District (hereinafter referral to as assessee) manufacturers of MS ingots. The assesses availed CENVAT Credit on the raw materials used in the manufacture of MS ingots. Held that- we hold that the impugned order imposing penalty on the appellant is unsustainable on merits as well as on time bar. In view of these findings, we set aside the impugned order and allow the appeal. Early hearing application and stay petition also get disposed off.

Summary

Issues:
- Appeal against Order-in-original No. O-I-O No. 15/2008(CX)(PNR), dated 4-7-2008
- Penalty imposed on the Deputy Commissioner under Rule 210 of the Central Excise Rules, 1944/Rule, 27 of the Central Excise (No.2) Rules,2001

Analysis:

Issue 1: Appeal against Order-in-original
The appeal was directed against Order-in-original No. 15/2008(CX)(PNR), dated 4-7-2008. The issue revolved around the availing of CENVAT Credit on raw materials by M/s. Thir'ven Steels Pvt. Ltd., a manufacturer of MS ingots. The authorities discovered that imported scrap was sold without being brought into the factory, leading to a show cause notice against the assessee and the Deputy Commissioner. The appellant contested the notice, claiming issuance of certificates in good faith after verifying statutory records. The adjudicating authority imposed a penalty of Rs.5000 on the appellant for omissions and commissions under the Central Excise Act, 1944 and related rules.

Issue 2: Penalty Imposed on Deputy Commissioner
The penalty on the Deputy Commissioner was based on the allegation that she issued end-use certificates without proper verification of records, leading to the non-receipt of imported scrap in the factory premises. The authority held that the Deputy Commissioner should have verified all records to ascertain the utilization of the imported scrap. However, the tribunal found no specific allegation of collusion or deliberate issuance of certificates to assist the assessee. The tribunal emphasized the protection under Section 40(1) & (2) of the Central Excise Act, 1944 and Section 155(2) of the Customs Act, 1962 for actions taken in good faith. Citing precedent cases, the tribunal concluded that the penalty was unsustainable both on merits and due to time limitations. The impugned order imposing the penalty was set aside, and the appeal was allowed, along with the disposal of the early hearing application and stay petition.

In conclusion, the tribunal found that the penalty imposed on the Deputy Commissioner was unjustified as there was no evidence of collusion or deliberate wrongdoing. The tribunal emphasized the importance of adhering to time limits and protecting officials who act in good faith. The appeal was allowed, and the penalty was set aside, highlighting the significance of proper verification and statutory record reliance in such cases.