2024 (2) TMI 563 - AT - Central Excise

Levy of penalty - Suppression of facts or not - appellant have paid the amount of proportionate credit of input and input services attributed to the exempted goods or not - non-following the procedure as laid down under Rule 6 (3) (1)/(2)/3A of Cenvat Credit Rules, 2004 nor reversal of any credit utilized for manufacture of exempted goods - HELD THAT - The fact regarding manufacture and clearance of dutiable as well as exempted goods and availment of credit on the entire input and input services commonly used for manufacture of dutiable and exempted goods is very well on record and known to the department. Accordingly, there is no suppression of fact on the part of the appellant. Hence, the entire demand is prima-facie time bar. However, the appellant have admittedly paid the amount of Rs. 60,15,116/- and they are only contesting the penalty. Though the demand is prima facie time bar but since the appellant have admittedly paid and not contesting such payment, the demand to the extent of Rs. 60,15,116/- is upheld and payment made thereof by the appellant is maintained. However, the appellant is not liable for any penalty. The penalty is set aside. Needless to say that since the appellant have paid the amount of 60,15,116/- which is proportionate Cenvat credit attributed to the exempted goods belatedly, they are liable to pay the interest till the date of reversal - Appeal allowed in part.

Summary

Issues involved:
The issue involved in this case is regarding the imposition of penalty on the Appellant-Assessee for not following the procedure under Rule 6 of the Cenvat Credit Rules, 2004 in relation to the clearance of excisable goods at a nil rate of duty, leading to a demand by the Revenue for a specific amount.

Summary of Judgment:

Issue 1: Imposition of Penalty

The Appellant-Assessee, engaged in manufacturing both dutiable and exempted goods, availed Cenvat credit for input and input services used for both types of goods. The Revenue issued a show cause notice demanding a specific amount due to non-compliance with Rule 6 of the Cenvat Credit Rules, 2004. The Adjudicating Authority reduced the demand after considering the appellant's submissions but confirmed the interest and imposed a penalty. The Appellant filed an appeal challenging the penalty imposition.

Appellant's Argument:
The Appellant's counsel argued that despite the demand being prima facie time-barred, the Appellant had paid the proportionate credit related to exempted goods. Citing legal precedents, the counsel contended that no demand under Rule 6 is sustainable upon the reversal of proportionate credit.

Revenue's Response:
The Assistant Commissioner representing the Revenue reiterated the findings of the impugned order.

Tribunal's Decision:
After considering both sides' submissions and the records, the Tribunal found that the penalty issue needed resolution. Despite having a strong case on the time bar, the Appellant had paid the proportionate credit and was not contesting it. The Tribunal noted that there was no suppression of facts by the Appellant, making the entire demand prima facie time-barred. Therefore, the Tribunal upheld the demand for the specific amount but waived the penalty. The Appellant was directed to pay interest till the date of reversal. The impugned order was modified accordingly, and the appeals were partly allowed.

Conclusion:
The Tribunal's decision upheld the demand for the specific amount related to Cenvat credit but waived the penalty, considering the Appellant's compliance with payment. The Appellant was directed to pay interest till the date of reversal, and the impugned order was modified accordingly.