2017 (4) TMI 1081 - AT - Central Excise

Imposition of penalty - whether for violation of provision of Rules 3(5B) of the CCR, 2004. Whether penalty can be imposed u/r 15(1) read with Section 11AC of the Act or not? - Held that - the provision of Rules, 3(5B) and Rule 6(3) (b) of the Cenvat Credit Rules are similar - penalty is not imposable on the appellant - appeal allowed - decided in favor of appellant.

Summary

Issues: Appeal against penalty under Rule 15(1) of Cenvat Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944.

Analysis:
1. Facts of the Case: The appellant, engaged in manufacturing excisable goods, claimed Cenvat Credit on inputs. Some inputs were written off in their books without reversing the Cenvat Credit as required by Rule 3(5B) of the Cenvat Credit Rules, 2004. Upon Revenue's intervention, proceedings were initiated, and the appellant eventually reversed the Cenvat Credit related to the inputs.

2. Adjudication and Appeal: The appellant approached the Ld. Commissioner (Appeals) seeking to drop the demand for interest and penalty. The Ld. Commissioner (Appeals) waived the interest but upheld the penalty. Dissatisfied, the appellant appealed against the penalty imposition.

3. Appellant's Argument: The appellant's counsel contended that as per Rule 3(5B), no penalty should be levied on the appellant. She cited the decision of the Hon’ble Punjab and Haryana High Court in a specific case, supported by a similar Tribunal case, to bolster her argument.

4. Revenue's Position: The Revenue's representative argued that the penalty was imposed under Section 11AC of the Act, indicating the basis for the penalty imposition.

5. Judgment: The key issue before the Tribunal was whether a penalty could be imposed under Rule 15(1) read with Section 11AC of the Act for the violation of Rule 3(5B) of the Cenvat Credit Rules, 2004. The Tribunal referenced the Hon’ble Punjab & Haryana High Court's decision in a relevant case, which clarified that penalties under Section 11AC apply to duty evasion, not to cases like the appellant's involving the reversal of excess amounts claimed under specific rules. Given the similarity between Rules 3(5B) and Rule 6(3)(b) of the Cenvat Credit Rules, the Tribunal concluded, following the precedent, that the penalty was not applicable in this scenario. Consequently, the penalty imposed on the appellant was set aside, and the appeal was allowed with any necessary consequential relief.

This detailed analysis of the judgment highlights the legal arguments presented, the basis for the penalty imposition, and the Tribunal's decision based on relevant legal precedents and interpretations of the law.