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2023 (12) TMI 949 - AT - Central ExciseWrongful re-credit of CENVAT credit while availing the exemption under the Notification No.56/2002 - recovery of erroneous refund - levy of penalty. It is the case of the Revenue that learned Commissioner has erred in as much as he did not impose penalty equivalent to the duty evaded in terms of Section 11AC. HELD THAT - Whereas the Commissioner has confirmed the demand of wrongfully availed credit of Rs.1,05,61,543/- under Section 11A and imposed penalty of Rs.20,39,919/-. Reasoning given by Commissioner was that the time under which the issue was under Stay can be excluded. We are of the opinion that Section 11AC does not provide for any such exclusion. Penalty under Section 11AC is related to the amount of duty evaded. Learned Commissioner could not have upheld the invocation of Section 11AC and imposed reduced penalty. The wordings of the Section 11AC are clear and therefore, there is no scope for any doubt in this regard. The penalty is required to be imposed equal to the duty evaded or credit wrongfully availed or duty erroneously refunded. The impugned order is modified to the extent of increasing the penalty imposed under Section 11AC from Rs.20,39,919/- to Rs.1,05,61,543/-. The appeal is, accordingly, allowed.
Issues involved: Appeal against Order-in-Original for forfeiture of self-credit, imposition of penalty for wrongful re-credit of CENVAT credit, interpretation of Section 11AC for penalty imposition.
Summary: Issue 1: Forfeiture of self-credit The appeal was filed against the Order-in-Original dated 17.08.2012 passed by the Commissioner of Central Excise, Jammu & Kashmir, regarding the forfeiture of self-credit for the year 2007-2008. The respondents continued to avail self-credit based on a Stay Order granted by the Commissioner (Appeals) despite the initial order by the Assistant Commissioner. The Commissioner (Appeals) later rejected the appeals of the appellants, leading to a show-cause notice alleging wrongful re-credit of CENVAT credit. The impugned order confirmed the recovery of an erroneous refund and imposed a penalty. Issue 2: Penalty imposition under Section 11AC The Revenue appealed, arguing that the Adjudicating Authority should have imposed an equal penalty under Section 11AC, citing precedents such as Dharmendra Textile Processors, Rajasthan Spinning and Weaving Mills, and Stesalit Limited. The Revenue contended that the Commissioner erred in imposing a lesser penalty due to the stay order by the Commissioner (Appeals), which was considered an interim order subject to the final decision. The argument was supported by cases like R.C. Tobacco Company Pvt. Ltd. and South Eastern Coalfields Ltd. Issue 3: Tribunal's decision The Tribunal noted that the Commissioner had not imposed a penalty equivalent to the duty evaded as required by Section 11AC. The Commissioner's reasoning for excluding the time under which the issue was under stay was deemed incorrect. The Tribunal emphasized that Section 11AC mandates a penalty equal to the duty evaded, without any scope for exclusion. Citing the judgments of the Hon'ble Apex Court, the Tribunal modified the impugned order to increase the penalty from Rs.20,39,919/- to Rs.1,05,61,543/-, aligning with the duty evaded. The appeal was allowed based on this modification.
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