2010 (5) TMI 303 - AT - Service Tax

Cenvat Credit - The only ground on which the impugned order is sought to be challenged is that the Commissioner (Appeals) while allowing the appeal filed by the respondent erred in reducing the penalty ignoring the mandate of rule 13(i) of the Cenvat Credit Excise Rules 2002 as well as of rule 26 of the Central Excise Rules 2002 in relation to the minimum penalty imposable against the defaulter. Revenue challenged said reduction of penalty on ground that both rules prescribed minimum penalty which is higher than amount of penalty imposed under impugned order. Held that - since both rules prescribed only maximum limit of penalty and neither of rules prescribed minimum amount of penalty which is left to discretion of authority there was no substance in challenge to impugned order by revenue.

Summary

Issues: Challenge to reduction of penalty by Commissioner (Appeals) under Cenvat Credit Excise Rules, 2002 and Central Excise Rules, 2002.

The judgment by the Appellate Tribunal CESTAT, New Delhi involved a challenge to a reduction in penalty imposed by the Commissioner (Appeals) under the Cenvat Credit Excise Rules, 2002 and Central Excise Rules, 2002. The appellants contested that the Commissioner erred in reducing the penalty without considering the minimum penalty requirements set out in rule 13(i) of the Cenvat Credit Excise Rules, 2002 and rule 26 of the Central Excise Rules, 2002.

In the analysis, the Tribunal noted that the impugned order reduced the penalty from Rs. 15,000 to Rs. 5,000. The appellants argued that both rule 13(i) and rule 26 prescribed a minimum penalty higher than the amount imposed, justifying interference with the impugned order. However, upon examining the rules, the Tribunal found that neither rule specified a minimum penalty amount. The rules only set a maximum limit for the penalty, leaving the actual amount to the discretion of the authority. The phrase "not exceeding" in the rules pertained to the maximum penalty that could be imposed, not a minimum amount. Therefore, the challenge to the impugned order was deemed unsubstantiated.

Since no other grounds were raised to challenge the impugned order, the appeal was dismissed by the Tribunal. The judgment clarified that the discretion to determine the penalty amount within the prescribed limits lies with the authority and that the appellants' argument regarding the minimum penalty requirement was unfounded based on the plain reading of the relevant rules.