2018 (11) TMI 457 - AT - Central Excise

Penalty u/r 15 of CENVAT Credit Rules and 27 of Central Excise Rules 2002 - CENVAT Credit - inclusion of cylinder charges in assessable value - Held that - The Commissioner (A) has observed that the appellant has declared the stock of inputs and the RO had caused necessary verification after the assessee cross the exemption limit, the allegation that the credit is irregular cannot be sustained - Once the allegation of irregular credit is not sustained then the confirmation of duty is not tenable in law. Further, the appellants have maintained proper records which were shown to the Department and all the questions of the Department were answered by the appellant with documentary evidence of the records - credit rightly availed. Appeal allowed - decided in favor of appellant.

Issues:
Appeal against penalty under Rule 15 of CENVAT Credit Rules and 27 of Central Excise Rules 2002.

Analysis:
The appeal was filed against the impugned order passed by the Commissioner (Appeals) which partially allowed the appellant's appeal and dropped the penalty under Rule 15 of CENVAT Credit Rules and 27 of Central Excise Rules 2002. The case involved the appellant, a manufacturer of packaging films, who had collected cylinder charges from customers but had not discharged the duty, leading to the imposition of penalties. The appellant also availed credit without proper records, which was reversed upon notice. The lower authority imposed penalties under Section 11AC and Rule 15(2) of CCR. The appellant argued that the impugned order was unsustainable as it did not properly appreciate the facts and documents. The appellant claimed they were under the SSI exemption and had paid the duty willingly on non-inclusion of cylinder charges. They also argued that the credit availed was legitimate as they had crossed the exemption limit and provided details to the authorities. The appellant maintained that they had proper digital records, though the Department alleged non-maintenance of records. The appellant's consultant contended that the Department's observations were inaccurate and that the appellant had cooperated with authorities, providing necessary documentation.

The learned consultant for the appellant argued that the impugned order was legally unsustainable, emphasizing that the appellant had rectified their mistake of non-inclusion of cylinder charges and had paid the duty promptly. The consultant highlighted the appellant's compliance after crossing the exemption limit and the communication with Excise authorities regarding availing CENVAT credit. The Department's failure to provide the report of their factory visit was also noted. The consultant refuted the Department's claim of irregular credit, asserting that the appellant maintained proper records, cooperated with authorities, and answered all queries with documentary evidence. The consultant contended that the Commissioner (A)'s findings were contradictory, as the appellant had declared stock of inputs and undergone necessary verification after crossing the exemption limit. Ultimately, the consultant argued that the appellant's appeal should be allowed, as the allegation of irregularly availing CENVAT credit was not sustainable in law.

The Tribunal, after hearing both parties and examining the evidence, found in favor of the appellant. The Tribunal noted that the appellant, being an SSI unit, had paid excise duty after crossing the exemption limit and had rectified the non-inclusion of cylinder charges promptly. Regarding the CENVAT credit issue, the Tribunal acknowledged the appellant's communication with authorities and the lack of provided reports by the Department. The Tribunal found the Commissioner (A)'s findings contradictory and unsustainable in law, as the appellant had maintained proper records, cooperated with authorities, and answered all queries satisfactorily. Consequently, the Tribunal set aside the impugned order, allowing the appellant's appeal with any consequential relief deemed necessary.

*(Operative portion of the Order was pronounced in Open Court on 02/11/2018)*

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