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Confiscation and Penalty - Cenvat Credit - Ready Reckoner - Cenvat Credit

Confiscation and Penalty
  • Contents

Chapter 21

Confiscation and Penalty

Statutory Provisions:

Rule 15 & 15A of the Cenvat Credit Rules, 2004

Confiscation and penalty.-

(1) If any person, takes or utilises CENVAT credit in respect of input or capital goods or input services, wrongly or in contravention of any of the provisions of these rules, then, all such goods shall be liable to confiscation and such person, shall be liable to a penalty  [clause (a) or clause (b) of sub­section (1) of section 11AC of the Excise Act or sub-section (1) of section 76 of the Finance Act (32 of 1994), as the case may be.]

(2) In a case, where the CENVAT credit in respect of input or capital goods or input services has been taken or utilised wrongly by reason of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of the Excise Act, or of the rules made thereunder with intent to evade payment of duty, then, the manufacturer shall also be liable to pay penalty in terms of the provisions of [clause (c), clause (d) or clause (e) of sub-section (1) of section 11AC of the Excise Act.]

(3) In a case, where the CENVAT credit in respect of input or capital goods or input services has been taken or utilised wrongly by reason of fraud, collusion or any wilful 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 sub-section (1) of section 78] shall be substituted.

(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.

General penalty.-

Whoever contravenes the provisions of these rules for which no penalty has been provided in the rules, he shall be liable to a penalty which may extend to five thousand rupees.

 

 

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  • Confiscation of Goods in respect of inputs or Capital goods

Rule 15(1) provides that, if any person, takes CENVAT credit in respect of input or capital goods, wrongly or in contravenes of any of the provisions of these rules in respect of any input or capital goods, then, all such goods shall be liable to confiscation.

The provisions of rule 15(1) covers two situations. In the first situation the person has availed the Cenvat Credit wrongly and goods are liable to be confiscated. In the second situation the person has taken the Cenvat Credit correctly but failed to comply with the other provisions of the Cenvat Credit Rules and therefore the goods are liable to be confiscated.

  • Penalty in respect of Input or Capital Goods  or input Services - General

Rule 15(1) provides that the person who is availing Cenvat Credit wrongly or without taking reasonable steps, shall be liable to a penalty not exceeding the duty on the excisable goods in respect of which any contravention has been committed, or two thousand rupees, whichever is greater.

  • Penalty in respect of Input or Capital Goods or Input Services  - Specific

Where the CENVAT credit in respect of input or capital goods or input services has been taken or utilized wrongly on account of fraud, willful mis-statement, collusion or suppression of facts, or contravention of any of the provisions with intention to evade duty / service tax -

Rule 15(2) - Manufacturer shall be liable to pay penalty in terms of the provisions of section 11AC of the Excise Act.

  • Penalty in respect of Input or Capital Goods or Input Services  - Specific

Where the CENVAT credit in respect of input or capital goods or input services has been taken or utilized wrongly on account of fraud, willful mis-statement, collusion or suppression of facts, or contravention of any of the provisions with intention to evade duty / service tax -

Rule 15(3) - Output service provider shall be liable pay penalty in terms of the provisions of section 78 of the Finance Act.

  • Principles of Natural Justice must be observed

Rule 15(4) any order under sub-rule (1), sub-rule (2), sub-rule (3) or sub-rule (4) shall be issued by the Central Excise Officer following the principles of natural justice.

A general penalty upto Rs.Five thousand is prescribed in the rules in case of contravention of any provisions of these rules, for which no specific penal provision exists.

 
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