2018 (6) TMI 41 - AT - Central Excise

Benefit of reduced penalty - Ineligible CENVAT credit - invoices issued prior to 01.09.2014 - N/N. 21/2014 dated 11.07.2014 - whether reduced penalty to the tune of 25% as per section 11AC (1)(b) of Central Excise Act, 1944, is allowed to be paid by the appellant herein or otherwise? - Held that - if an adjudicating authority imposes penalty post 14.05.2015 under the provisions of Rule 15(1) of the CENVAT Credit Rules, 2004, an assessee has an option to pay 25% penalty as per the provisions of Section 11AC (1)(b) of the Central Excise Act, 1944, if he does so within 30 days. In the present case, the Order-in-Original is passed on 30.06.2016, it is very clear from the records, it was received by the appellant on 12.07.2016 as per the copy of acknowledgment produced by Counsel. If the appellant has paid 25% of the amount of the penalty of ₹ 1,53,273/- within 30 days of the receipt of the Order-in-Original, which in this paid on 09.08.2016, the benefit of Section 11AC(1)(b) of the Central Excise Rule needs to be extended - the case stands closed for the appellant herein, he need not pay any further penalty. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Applicability of reduced penalty under Section 11AC(1)(b) of the Central Excise Act, 1944.
2. Interpretation of penalty provisions under Rule 15(1) of the CENVAT Credit Rules, 2004.
3. Compliance with penalty payment within the specified timeframe.

Analysis:
1. The appeal involved a dispute regarding the appellant's entitlement to a reduced penalty of 25% under Section 11AC(1)(b) of the Central Excise Act, 1944. The appellant had availed CENVAT credit on invoices issued prior to the relevant notification, leading to a show cause notice for recovery. The Adjudicating Authority imposed a penalty under Rule 15(1) of the CENVAT Credit Rules, 2004, which was challenged on the grounds of reduced penalty applicability.

2. The learned Counsel highlighted the provisions of Section 11AC and Rule 15(1), emphasizing the applicability of reduced penalties post a specific date. The Adjudicating Authority's penalty imposition was based on Rule 15(1) read with Section 11AC(1)(b), leading to a penalty of 10% of the total demand. The relevant legal provisions were thoroughly examined to determine the correct application of penalties in the given scenario.

3. The appellate tribunal carefully considered the timeline of penalty payment and the appellant's compliance with the specified requirements. The appellant had paid 25% of the penalty amount within 30 days of receiving the Order-in-Original, demonstrating adherence to the provisions of Section 11AC(1)(b). Consequently, the tribunal modified the impugned order, holding that the appellant was not liable for any further penalty, thereby closing the case in favor of the appellant.

In conclusion, the judgment clarified the applicability of reduced penalties under Section 11AC(1)(b) in cases involving penalty imposition under Rule 15(1) of the CENVAT Credit Rules, emphasizing the importance of timely compliance with penalty payment requirements as stipulated by the law.