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TMI Blog2009 (8) TMI 349X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of electricity was not used within the factory of production and did not fall in the definition of input. The Tribunal set-aside the penalty. Held that- the revenue could not point out any finding of availing Cenvat Credit by playing fraud, willful misstatement, collusion, or suppression of facts. Thus in the absence of such finding, the imposition of penalty is not automatic and cannot be levied. The impugned appeal was liable to be dismissed. X X X X Extracts X X X X X X X X Extracts X X X X ..... edit Rules, 2002 (for brevity 'the Rules') and therefore credit on such Naptha is not admissible in terms of provisions of rule 3(1) of the Rules. Therefore, Cenvat credit taken on such quantities of Naptha which is used for manufacture of electricity and sold to their joint ventures and vendors is inadmissible in terms of rule 6(1) of the Rules. The respondent assessee was issued a show-cause notice on 30-1-2004 (A.1) for wrongly availing the Cenvat credit to the tune of Rs. 67,17,876 on quantity of Naptha utilised in generation of electricity supplied to joint ventures, vendors and spare parts division of M/s. MUL from January, 2003 to October, 2003 inasmuch as Naptha used in generation of electricity not used within the factory of produc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Rules which reads thus: "13. Confiscation and penalty.- (1) If any person, takes Cenvat credit in respect of inputs or capital goods, wrongly, or without taking reasonable steps to ensure that appropriate duty on the said inputs or capital goods has been paid as indicated in the document accompanying the inputs or capital goods specified in rule 7, or contravenes any of the provisions of these Rules in respect of any inputs or capital goods, then, all such goods shall be liable to confiscation and such person, shall be liable to a penalty not exceeding the duty on the excisable goods in respect of which any contravention has been committed, or ten thousand rupees, whichever is greater. (2) In a case, where the CENVAT credit has been t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns made in the Act or the Rules with the intention to evade payment of duty then a dealer would be liable to pay penalty in terms of section 11AC of the Act. The Hon'ble Supreme Court in the case of Union of India v. Dharamendra Textile Processors 2008 (231) ELT has held that in the absence of specific requirement of the statutory provision to satisfy the ingredient of intention there would be no necessity to prove that the evasion of duty was intentional. According to the view taken by their Lordships the function of provision of section 11 AC of the Act is to provide machinery to enforce the civil liability and no mens rea would be required. 5. The aforesaid view has been further explained by their Lordships of Hon'ble the Supreme Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he intention to evade payment of duty. We confronted Mr. Sehgal, learned counsel for the revenue to point out any finding of availing Cenvat credit by playing fraud, wilful mis-statement, collusion etc. with the intention to evade payment of duty but he remained unable to show any such finding. It is pertinent to notice that rule 13(2) of the Rules uses strong expression like fraud, wilful mis-statement, collusion or suppression of facts etc. with the intention to evade payment of duty. In the absence of any proof it has to be presumed that there was no such settlement involved in transaction. Mr. Sehgal, learned counsel for the revenue was not able to read anything from the order of the Tribunal or that of the Commissioner to show any such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e notice the period for which the escaped duty may be reclaimed would be confined to one year and in the absence of such a finding in the order passed under section 11A(2) there would be no application of the penalty provision in section 11AC of the Act. On behalf of the assessee it was also submitted that sections 11A and 11AC not only operate in different fields but the two provisions are also separated by time. The penalty provision of section 11AC would come into play only after an order is passed under section 11A(2) with the finding that the escaped duty was the result of deception by the assessee by adopting a means as indicated in section 11AC. 19. From the aforesaid discussion it is clear that penalty under section 11AC, as the wo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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