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2015 (10) TMI 2345 - AT - Central ExciseCenvat Credit - Storage of input outside the factory - Removal of goods without necessary permission under Rule 8 of CENVAT Credit Rules 2004 - delivery of the letter written by the Appellant has been questioned by the Department - Confiscation and penalty - Held that - Inputs were cleared without necessary permission and without reversal of appropriate amount of CENVAT Credit as undertaken by the Appellant. As per the provisions of CENVAT Credit Rules 2004, when the inputs are cleared as such from the factory premises, then equivalent amount of CENVAT Credit is required to be reversed. By not doing so, the Appellant has contravened the provisions of CENVAT Credit Rules 2004 and by virtue of the provisions contained in Rule 15(1) of CENVAT Credit Rules 2004, such inputs are liable to confiscation. Accordingly, the order of confiscation made by the Adjudicating authority is proper and cannot be faulted with. - However redemption fine imposed by the Adjudicating authority is reduced to ₹ 1 lakh. In case, the entire quantity of inputs were used in the manufacture of finished goods or cleared as such on payment of duty, then the question of imposing penalty under Section 11AC of Central Excise Act, 1944 read with Rule 15 of CENVAT Credit Rules will not arise, except for payment of interest on CENVAT involved from the date of clearance of inputs from the factory till they are used in the manufacture of finished goods or cleared as such on discharge of appropriate amount of duty. So far as imposition of penalties upon other Appellants is concerned, it is observed that these penalties have been imposed under Rule 26 of CENVAT Credit Rules 2004 and not under CENVAT Credit Rules 2002. Penalties upon the other Appellants for violating CENVAT Credit Rules 2004, can only be imposed under the penal provisions of CENVAT Credit Rules 2004 and not under Rule 26 of Central Excise Rules, 2002. Appeals filed by the other Appellants are accordingly allowed. - Decided partly in favor of assessee.
Issues:
Violation of CENVAT Credit Rules 2004 regarding storage of duty paid inputs in a godown away from the factory without necessary permission and reversal of credit. Confiscation of inputs, imposition of fines, and penalties on the main Appellant and other individuals involved. Verification of the usage of seized inputs in the manufacture of finished goods or their clearance on payment of duty. Imposition of penalties on other Appellants under the correct provisions of the law. Analysis: Issue 1: Violation of CENVAT Credit Rules 2004 The main issue in the judgment pertains to the violation of CENVAT Credit Rules 2004 by storing duty paid inputs in a godown outside the factory without obtaining necessary permission and without reversing the credit. The Appellant claimed to have informed the Department through letters seeking permission but proceeded with storage due to lack of response. The Adjudicating authority confirmed the violation, leading to confiscation of inputs and imposition of fines and penalties. Issue 2: Confiscation, Fines, and Penalties The Adjudicating authority confiscated the seized inputs and imposed a redemption fine, which was deemed excessive by the Tribunal considering the CENVAT Credit involved. The fine was reduced in the interest of justice. Additionally, penalties were imposed on the main Appellant for contravening CENVAT Credit Rules 2004. The Tribunal emphasized the need for proper documentation and reversal of credit when inputs are cleared without permission. Issue 3: Verification of Input Usage The Tribunal highlighted the importance of verifying whether the seized inputs were actually used in the manufacture of finished goods or cleared after payment of duty. The Appellant failed to provide conclusive evidence of the usage of the inputs, necessitating further verification by the Adjudicating authority to determine the applicability of penalties under relevant provisions of the law. Issue 4: Imposition of Penalties on Other Appellants Penalties imposed on other individuals involved were found to be under the wrong provisions of the law. The Tribunal clarified that penalties for violating CENVAT Credit Rules 2004 should be imposed under the correct penal provisions and not under a different set of rules. Consequently, the appeals filed by the other Appellants were allowed based on this interpretation. In conclusion, the judgment addressed various aspects of the violation of CENVAT Credit Rules 2004, including confiscation, fines, penalties, and the verification of input usage. The decision provided insights into the importance of compliance, proper documentation, and the accurate application of penal provisions under the law.
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