2015 (12) TMI 1310 - AT - Central Excise

CENVAT Credit - Penalty u/s 11AC - whether the imposition of penalty of equal amount of Cenvat Credit under Rule 15(2) of the Rules and Section 11AC of the Act is warranted - Held that - There was a balance in the Cenvat account, more than the amount as demanded. It is clear that the appellant themselves filed the revise return to regularize the amount. Thus, there is no material available of suppression of fact with intent to evade payment of duty under the Section11AC of the Act. It is consistently viewed by the Tribunal that to impose penalty under Section 11AC of the Act, it is required to establish the short levy of duty would arise by reasons of fraud, collusion or any wilful mis-statement or suppression of fact with intent to evade payment of duty - impugned order is modified in so far as the demand of Cenvat Credit/duty alongwith interest is upheld. The penalty imposed under Rule 15(2) of the Cenvat Credit Rules read with Section 11AC of the Act, is set aside - Decided in favour of assessee.

Summary

Issues: Imposition of penalty under Rule 15(2) of the Cenvat Credit Rules 2004 and Section 11AC of the Central Excise Act 1994.

Analysis:
1. The appellant did not contest the demand of Cenvat Credit of Rs. 20,12,181, which they reversed immediately after self-detection. The main argument was that they did not utilize the credit, so no interest was payable, and there was no intent to evade payment of duty to warrant penalty under Rule 15(2) and Section 11AC. The appellant's advocate cited various decisions to support this stance.

2. The Revenue's representative argued that the appellant deliberately availed the credit twice, justifying the invocation of Section 11AC. It was contended that there was contravention of the Rules and the Act, warranting the penalty. The appellant, in response, acknowledged the demand for interest after considering the amount in question.

3. The dispute centered on whether the penalty under Rule 15(2) and Section 11AC was warranted. The Tribunal noted that the appellant rectified the excess availed Cenvat credit in their revised returns, reflecting and reversing the amount. The Tribunal found no suppression of fact with intent to evade duty payment, a requirement for invoking Section 11AC. The Tribunal referenced previous decisions to support this view.

4. It was observed that the appellant maintained a balance in the Cenvat account higher than the demanded amount, and they voluntarily filed revised returns to regularize the situation. As there was no evidence of fraud or suppression of facts to evade duty payment, the penalty under Section 11AC was deemed unwarranted. The appellant had also paid a penalty for filing a revised return under Section 70 of the Finance Act 1994.

5. Consequently, the Tribunal modified the impugned order, upholding the demand for Cenvat Credit/duty with interest but setting aside the penalty under Rule 15(2) and Section 11AC. The appeal was disposed of accordingly, granting consequential relief to the appellant.