2019 (3) TMI 104 - AT - Central Excise

Imposition of penalty equal to 50% of the demand under Rule 15(2) of the CCR, 2004 - appellant has paid the entire duty along with interest much before the issuance of SCN and has prayed that the case should be closed - Held that - The appellants have shown CENVAT credit taken on various items in their books of accounts and the Revenue has not brought out any material to show that there was suppression of fact on the part of the appellant with intent to evade payment of duty - it is now well settled law that the allegation of suppression, wilful statement etc. are grave and the burden to prove this allegation is always on the Revenue. Further, it is well established position of law that mere failure, inaction or negligence on the part of the assessee not to pay tax/duty cannot be considered as amounting to suppression and something positive or deliberate with holding of information which the assessee knew or otherwise that he acted in deliberate defiance of law is required to be established. Penalty not warranted - appeal allowed - decided in favor of appellant.

Issues involved:
- Alleged availing of ineligible credits on various items
- Rejection of appeal by the Commissioner (A)
- Imposition of penalty under Rule 15(2) of the CCR, 2004
- Allegation of suppression on the part of the appellant
- Burden of proof on the Revenue for allegations of suppression
- Applicability of penalty in the given circumstances

Analysis:

Alleged availing of ineligible credits on various items:
The case involved the appellant, engaged in the manufacture of 'Bulk Drugs & Intermediates,' facing allegations of availing ineligible credits on Customs Education Cess, Customs Higher Secondary Cess, services, and steel items. The Deputy Commissioner of Central Excise issued an Order-in-Original demanding recovery of credits along with interest and penalties. The appellant appealed the decision, claiming that the credits were availed bona fide and were duly recorded in their documents and returns.

Rejection of appeal by the Commissioner (A):
The Commissioner (A) rejected the appellant's appeal, leading to the present appeal before the Appellate Tribunal. The appellant argued that the impugned order was unsustainable in law, emphasizing that they had promptly rectified the irregular credits upon audit discovery, paid the due amount along with interest before the issuance of the show-cause notice (SCN), and had not suppressed any facts to evade duty payment.

Imposition of penalty under Rule 15(2) of the CCR, 2004:
The Deputy Commissioner imposed a penalty equal to 50% of the demand under Rule 15(2) of the CCR, 2004. The appellant contended that the penalty was unwarranted, as there was no deliberate suppression of facts on their part to evade duty payment. They argued that the Revenue failed to establish any suppression, and the imposition of the penalty was not justified based on legal precedents and the facts of the case.

Allegation of suppression on the part of the appellant:
The appellant refuted the allegation of suppression, asserting that they had acted in good faith by promptly rectifying the irregular credits upon audit detection. They maintained that there was no intent to evade payment of duty and that all relevant information regarding the availed credits was disclosed in their records and returns.

Burden of proof on the Revenue for allegations of suppression:
The Tribunal emphasized the strict interpretation of the term 'suppression' in tax laws, requiring the Revenue to prove deliberate intent to evade duty payment. Legal precedents cited by the appellant supported the argument that mere failure or negligence on the part of the assessee does not constitute suppression unless there is a deliberate withholding of information to evade duty payment.

Applicability of penalty in the given circumstances:
Considering the arguments, legal precedents, and the absence of concrete evidence establishing suppression with intent to evade duty payment, the Tribunal set aside the penalty imposed on the appellant. The Tribunal's decision was based on the lack of proof of deliberate suppression and the appellant's proactive actions to rectify the irregularities, ultimately allowing the appeal in favor of the appellant.

This detailed analysis of the judgment highlights the key issues, arguments presented by both parties, legal principles applied, and the final decision rendered by the Appellate Tribunal.

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