2013 (2) TMI 198 - AT - Central Excise

Penalty under section 11AC - CENVAT credit on the input Services viz. G.T.A. Service being reversed on being pointed out by Audit - Held that - Penalty under Section 11AC, as the word suggests, is punishment for an act of deliberate deception by the assessee with the intent to evade duty by adopting any of the means mentioned in the section. Therefore, mis-declaration, suppression of facts etc. with intent to evade payment duty is a sina qua non for invoking penal provision under section 11AC as decided in Rajasthan Spinning & Weaving Mills case 2009 (5) TMI 15 - SUPREME COURT OF INDIA As in the present case, no suppression or misstatement or mis-declaration on the part of the appellant,there is no suppression of fact as the entire amount of CENVAT Credit received and utilized both for traded as well as manufactured goods were duly accounted for in the CENVAT Credit register and the CENVAT Credit availed on the input services, were duly reflected in their monthly returns filed with the department. T brought out in the impugned Orders of the lower authorities, therefore penalty under section 11AC cannot be justified - in favour of assessee.

Summary

Issues: Appeal against penalty imposed under section 11AC of Central Excise Act, 1944 for wrongful availment of CENVAT credit on input services used for trading goods.

Analysis:
1. Facts of the Case: The appellant, engaged in manufacturing Electric Meters, received input services for trading and manufacturing purposes. They availed CENVAT credit on input services used for trading goods, leading to a penalty under section 11AC.

2. Appellant's Contentions: The appellant's Chartered Accountant argued that the wrongful credit availed was a bona fide mistake promptly rectified upon audit discovery. They contended that no duty demand was proposed in the show cause notice, challenging the penalty imposition under section 11AC.

3. Revenue's Arguments: The Additional Commissioner contended that the appellant's reversal of CENVAT credit beyond the normal period indicated an intention to wrongfully avail the credit. Reference was made to case laws supporting penalty imposition under section 11AC.

4. Judicial Analysis: The Tribunal noted the absence of suppressed facts or intentional misstatements by the appellant in availing the credit. The audit's purpose is to verify duty payments, and mere deficiencies do not imply malice. Citing legal precedents, the Tribunal emphasized that penalty under section 11AC requires deliberate deception to evade duty, which was not evident in this case.

5. Legal Precedents: Referring to the judgment in Rajasthan Spinning & Weaving Mills, the Tribunal reiterated that penalty under section 11AC necessitates intentional misrepresentation or suppression of facts to evade duty payment. As no such elements were found in the appellant's case, the penalty imposition was unjustified.

6. Conclusion: The Tribunal set aside the penalty imposed under section 11AC, highlighting the lack of evidence supporting deliberate deception or suppression of facts by the appellant. Since no other penal provision was invoked in the show cause notice, no penalty could be justified based solely on section 11AC.

7. Final Decision: The Commissioner's order confirming the penalty under section 11AC was overturned, and the appeal was disposed of accordingly. The judgment emphasized the essential requirement of intentional misrepresentation for penalty imposition under the Central Excise Act, 1944.