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TMI Blog2020 (2) TMI 1199X X X X Extracts X X X X X X X X Extracts X X X X ..... dit, whereas he has only issued a Cenvatable invoice to some other company M/s Kothi Steel Ltd. Therefore, the Rule 15 is not applicable in the present case. Hence, penalty imposed under Rule 15 of Cenvat Credit Rule, 2004 by the lower authorities is illegal and incorrect. Penalty imposed under Rule 26 of Central Excise Rules, 2002 - HELD THAT:- The same issue has been considered by the Hon ble High Court of Punjab Haryana in the case of M/S VEE KAY ENTERPRISES, FARIDABAD VERSUS COMMISSIONER OF CENTRAL EXCISE [ 2011 (3) TMI 133 - PUNJAB AND HARYANA HIGH COURT] which was followed by this Tribunal in the case of COMMISSIONER OF CENTRAL EXCISE AHMEDABAD VERSUS SHRI NAVNEET AGARWAL [ 2011 (8) TMI 250 - CESTAT, AHMEDABAD] wherein it was h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h of those invoices by M/s Kothi Steel Ltd. A Show Cause Notice was issued wherein penalty under Rule 15 of Cenvat Credit Rules, 2004 and Rule 26 of Central Excise Rules, 2002 for their alleged violation of provision of Rule 10,11 12 of Central Excise Rules, 2002 and Rule 3,4,7 9 of Cenvat Credit Rules, 2004 was proposed. The Adjudicating Authority, while adjudicating the case, imposed a penalty of ₹ 10 lakhs on the present appellant, Shri Naresh Agrawal, proprietor of M/s Agrawal Impex under Rule 15 of Cenvat Credit Rules, 2004. In addition, one more penalty of ₹ 10 lakhs was imposed on the appellant under Rule 26 of Central Excise Rules, 2002. The appellant, being aggrieved by the Order-in- Original, filed an appeal before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th interest on mistake being pointed out. In the said case, the Hon ble High Court of Madras has held that in the case of appellant, imposition of 100% penalty under Rule 26 of Central Excise Rule, 2002 is excessive under the circumstances as alleged ineligible credit probably passed on to buyer is not only recoverable under Rule 14 of Cenvat Credit Rules, 2004, but also because the appellant has paid the amount back with interest before issuance of show cause notice. The penalty was reduced to a token penalty of ₹ 5,000/-. He submitted that the submission of the learned counsel that Rule 26 (2)(ii) of Central Excise Rules,2002 was held not correct as the Hon ble High Court did not express its opinions on jurisdiction or validity of R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or any willful mis-statement or suppression of facts, or contravention of any of the provisions of these rules or of the Finance Act or of the rules made thereunder with intent to evade payment of service tax, then, the provider of output service shall also be liable to pay penalty in terms of the provisions of Section 78 of the Finance Act. (4) Any order under sub-rule (1), sub-rule (2) or sub-rule (3) shall be issued by the Central Excise Officer following the principles of natural justice. From the plain reading of the above, it is clear that the penalty under Rule 15 can be imposed only on that person who takes or utilizes the Cenvat credit. If in any case, any manufacturer who is liable to pay duty on final product wrongly a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have considered the submissions made by learned DR. In this case, the issue as to whether Shri Navneet Agarwal is liable to penalty under Rule 26 of the Central Excise Rules, 2002 when the Rule 26(2) was not in force. For ready reference, Rule 25 and 26 of Central Excise Rules, 2002 are reproduced as below :- Rule 25 - Confiscation and Penalty: (1) Subject to the provisions of Section 11AC of the Act, if any producer, manufacturer, registered person or a warehouse or a registered dealer- (a) remove any exciseable goods in contravention of any of the provisions of these rules or the notifications issued under these rules; or (b) does not account for any exciseable goods produced or manufactured or stored by him; or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (ii) any other document or abets in making such document, on the basis of which the user of said invoice or document is likely to take or has taken any ineligible benefit under the Act or the rules made thereunder like claiming of CENVAT Credit under the CENVAT Credit Rules, 2004 or refund, shall be liable to a penalty not exceeding the amount of such benefit or five thousand rupees, whichever is greater. 5 . After considering the issue and relevant rules the Hon ble High Court observed as follows in Para 10 of the decision in the case of Vee Kay Enterprises :- 10. In spite of non-applicability of Rule 26(2), penalty could be levied as the appellant was concerned in selling or dealing with the goods which were liable t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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