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2018 (4) TMI 473 - AT - Central ExcisePenalty - intent to evade duty - Held that - the issue involved in the present case is interpretation of Rule 6 of CCR, the intent to evade payment of duty cannot be alleged - the appellant has submitted that the entire demand is barred by limitation but as per the instructions of his client, the counsel for the appellant has not challenged the demand on limitation - penalty u/s 11AC not sustainable - appeal allowed - decided in favor of appellant.
Issues:
1. Confirmation of demand under CENVAT Credit Rules, 2002 and 2004. 2. Appropriation of amount already paid. 3. Confirmation of demand for interest. 4. Imposition of penalty under Section 11AC of the Central Excise Act, 1944. Analysis: Issue 1: Confirmation of demand under CENVAT Credit Rules, 2002 and 2004 The appeal was directed against an order confirming a demand of &8377; 10,35,564/- under Rule 12 of CENVAT Credit Rules, 2002 and Rule 14 of CENVAT Credit Rules, 2004. The appellant had availed CENVAT credit for inputs and input services commonly used for manufacturing both dutiable and exempted goods, resulting in a contravention of Rule 6 of CENVAT Credit Rules, 2004. The Commissioner confirmed the demand after due process, and subsequent appeals were filed challenging the same. The Tribunal analyzed the submissions and case laws, ultimately finding that the penalty imposed was not sustainable, leading to the dropping of the penalty. Issue 2: Appropriation of amount already paid The Commissioner had appropriated the amount already paid by the appellant towards the demand. The appellant had paid a significant amount along with interest, and the Tribunal noted that the demand had reduced from an initial &8377; 1.68 crores to &8377; 10.35 lakhs. The Tribunal considered the appellant's argument regarding the lack of suppression of facts and the applicability of case laws in similar circumstances. Issue 3: Confirmation of demand for interest In addition to confirming the demand amount, the Commissioner had also confirmed a demand for interest of &8377; 1,30,618/-. The Tribunal considered the entire history of the case, including previous rounds of litigation and the appellant's compliance with payment along with interest. The Tribunal's decision to drop the penalty also impacted the interest calculation. Issue 4: Imposition of penalty under Section 11AC of the Central Excise Act, 1944 The imposition of penalty under Section 11AC of the Central Excise Act, 1944 was a key contention in the appeal. The appellant argued that the penalty was not justified as the case did not involve willful or fraudulent availment of CENVAT credit. The Tribunal, after considering submissions from both sides and perusing records, found that the penalty imposed was not sustainable based on the interpretation of Rule 6 of CCR and the lack of establishment of suppression of facts by the Department. In conclusion, the Tribunal allowed the appeal to the extent of dropping the penalty, considering the appellant's compliance with payment and the lack of evidence supporting the imposition of penalty under Section 11AC of the Central Excise Act, 1944.
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