2013 (5) TMI 989 - AT - Central Excise

Summary

Issues involved:
The issues involved in this case are related to the contravention of Central Excise Rules with intent to evade payment of duty, imposition of penalty under Rule 15 of the Cenvat Credit Rules, and the applicability of penalty under section 11AC of the Central Excise Act.

Contravention of Central Excise Rules and Penalty Imposition:
The case involved a visit by Central Excise Officers to the factory premises of the respondent, where shortages in Cenvat Credit availed raw materials and finished goods were found. The respondent admitted the shortages, attributing them to recording mistakes by workers. The Jurisdictional Additional Commissioner confirmed the Cenvat Credit and duty shortages, imposed penalties under Rule 15 of the Cenvat Credit Rules, and appropriated the deposited amount. On appeal, the Commissioner (Appeals) upheld the demand but reduced the penalties. The Revenue appealed, arguing that once contravention was established, penalty under section 11AC should be applied without discretion to reduce it.

Appellate Tribunal's Decision:
The Tribunal noted that while the Commissioner (Appeals) found contravention with intent to evade duty, there was a lack of supporting facts or documents for clandestine removal allegations. As a result, the Tribunal held that penalty under section 11AC was not automatically attracted. The Tribunal set aside the impugned order, remanding the case for a fresh decision. The Commissioner (Appeals) was directed to analyze the evidence thoroughly and determine if allegations of clandestine removal were substantiated. Only if such allegations were upheld, penalty under section 11AC equal to the duty demand would be applicable without discretion to impose a lower penalty. The Revenue's appeal was allowed in this regard.

This judgment highlights the importance of substantiating allegations with evidence and ensuring a clear analysis of facts before imposing penalties under relevant sections of the Central Excise Rules.