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2012 (9) TMI 781 - HC - Central Excise


Issues:
1. Appeal against dropping of demands and imposition of penalty on assessee under CENVAT Credit Rules.

Analysis:
The appeal was filed by the Revenue against the appellate tribunal's decision favoring the assessee, where it was held that penal provisions cannot be enforced against the assessee if demands are dropped on any account. The assessee was initially served with a show-cause notice regarding irregular capital goods CENVAT credit availed by them. The Commissioner of Central Excise, after considering the objections raised by the assessee, acknowledged that the CENVAT credit cannot be denied based on incorrect depreciation claimed initially and rectified later. The Commissioner also noted the mandatory nature of the conditions in Rule 4 and imposed a penalty of Rs. 1,00,000 on the assessee but dropped the demand of CENVAT credit. The assessee then appealed to the Tribunal.

The Tribunal, in line with judgments from various tribunals, emphasized that if demands are dropped, there is no basis for imposing a penalty. The tribunal's decision was based on the legal position that once demands are dropped, the question of imposing a penalty does not arise. Consequently, the High Court found no substantial question of law for consideration in the appeal and dismissed it.

In conclusion, the High Court upheld the tribunal's decision, emphasizing that penal provisions cannot be enforced against the assessee when demands are dropped. The legal position dictates that dropping of demands precludes the imposition of penalties, as seen in various tribunal judgments across the country. Therefore, the appeal against the dropping of demands and imposition of penalty on the assessee under the CENVAT Credit Rules was dismissed by the High Court.

 

 

 

 

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