2013 (8) TMI 790 - AT - Central Excise

Default in Payment of Duty even in Grace Period - Penalty u/s 11A and 11AC - Whether a penalty equal to the illegally utilized CENVAT credit could have been imposed on the assessee under Rule 15(2) of the CENVAT Credit Rules, 2004 - The assesse committed default in payment of duty for the period upto 5th January 2009 - They failed to take even the benefit of grace period prescribed under Rule 8(3) of the Central Excise Rules Held that - The conduct of the assesse directly attracted Section 11AC of the Act - For the period after 5th January 2009, the assesse chose to utilize CENVAT credit for payment of duty on consignment wise clearances of goods - The conduct amounted to non-payment of duty on such goods thereby attracting Section 11A for recovery and Section 11AC for penalty. The intent to evade payment of duty in the prescribed manner is common to both the above ingredients viz. wilful mis-statement of facts and contravention of a rule - Rule 15(2) clearly provides that, in such situations, the manufacturer shall also be liable to pay penalty in terms of provisions of Section 11AC of the Act - the assesse had failed to substantiate their case against the penalty imposed on them under Rule 15(2) read with Section 11AC Appeal Dismissed.

Summary

Issues:
- Demand of duty confirmed against the assessee
- Demand of interest on duty and CENVAT credit amount
- Penalties imposed on the assessee by the original authority
- Allegations of misrepresentation in monthly returns
- Challenge against the demand of CENVAT credit amount
- Challenge against penalties imposed under Section 11AC and Rule 15(2)
- Applicability of Section 11AC for penalty imposition
- Imposition of penalty under Rule 15(2) of the CENVAT Credit Rules, 2004
- Interpretation of relevant legal provisions
- Comparison with cited legal judgments

Analysis:

The judgment pertains to an appeal filed by the assessee contesting penalties imposed by lower authorities. The demand of duty was confirmed, including excise duty and irregularly utilized CENVAT credit. Interest on duty and CENVAT credit was demanded under specific legal provisions. Penalties were imposed under Section 11AC of the Central Excise Act and Rule 15(2) of the CENVAT Credit Rules, 2004. The original authority alleged misrepresentation in monthly returns by the assessee, leading to penalties. The Commissioner(Appeals) affirmed the original order, prompting the current appeal.

The key dispute in the appeal revolved around the demand of CENVAT credit amount and the penalties imposed. The Tribunal found that the utilization of CENVAT credit by the assessee was in contravention of relevant rules, leading to a correct demand under the Central Excise Act and CENVAT Credit Rules. The challenge against this demand was dismissed. Regarding penalties, the applicability of Section 11AC for penalty imposition was contested. The Tribunal upheld the penalties, stating that the assessee's conduct warranted penalty imposition under Section 11AC due to defaults in duty payment and misrepresentation in returns.

The judgment also addressed the imposition of penalty under Rule 15(2) of the CENVAT Credit Rules, 2004. The Tribunal found that the assessee's actions constituted a wilful misstatement of facts with intent to evade duty payment, justifying the penalty under Rule 15(2) read with Section 11AC. The Tribunal analyzed various legal provisions and cited judgments to support its decision, emphasizing the unique circumstances of the case. Ultimately, the appeal was dismissed, affirming the penalties imposed on the assessee for duty defaults and misrepresentations in returns.