9911796707
TMI Blog2009 (8) TMI 349X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellate Tribunal, New Delhi (for brevity 'the Tribunal') by claiming that the following substantive question of law would arise for determination of this Court: "Whether the Hon'ble CESTAT was justified in setting aside the penalty imposed under rule 13 of the Cenvat Credit Rules, 2002, on the ground that it is a case of interpretation of law, though the party knowingly availed and utilised inadmissible Cenvat credit contravening the provisions of rules 2(g), 3(1) and 6(1) of Cenvat Credit Rules, 2002?" 2. Brief facts of the case, as disclosed in the appeal, are that the respondent assessee is engaged in the manufacturing of motor vehicles under Chapter headings 87.02 and 87.08 of the Schedule to the Central Excise Tariff Act, 1985. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The case was adjudicated by the Commissioner of Central Excise who vide order dated 30-11-2003 (A.2) disallowed the proportionate credit of Rs. 67,71,876 and penalty of equivalent amount under rule 13 of the Rules was imposed. The Commissioner also ordered charging of interest under section 11AB. The respondent-assessee filed an appeal before the Tribunal. The Tribunal vide order dated 20-6-2008 (A.3) modified the order by maintaining the demand of Rs.67,71,876 along with interest but set aside the penalty of equivalent amount imposed under rule 13 of the Rules. In support of the above conclusion, the Tribunal relied upon the judgment of Hon'ble the Supreme Court in the case of Collector of Central Excise v. Solaris Chemtech Ltd 2007 (214 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to evade payment of duty, then, the manufacturer shall also be liable to pay penalty in terms of the provisions of section 11AC of the Act. (3) Any order under sub-rule (1) or sub-rule (2) shall be issued by the Central Excise Officer following the principles of natural justice." 4. A perusal of sub-rule (1) of rule 13 of the Rules would show that if Cenvat credit in respect of any inputs or capital goods have been obtained wrongly or without taking reasonable steps or making payment of appropriate duty then all such goods are liable to be confiscated and such a person has been made liable to penal action. Accordingly duty on the excisable goods in respect of which contravention has been committed has been provided. It is further provid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o every case of non-payment of duty or short-payment of duty. Therefore, to determine whether the penalty is impossible or not, it has been held in para 19 of the judgment that 'penalty under section 11AC, as the word suggests, is punishment for an act of deliberate deception by the assessee with the intent to evade duty by adopting any of the means mentioned in the section'. Accordingly Hon'ble the Supreme Court has held that the judgment in Dharamendra Textile Processors's case (supra) is not an authority for the proposition that section 11AC of the Act would apply to every case of non-payment or short-payment of duty regardless of fulfilment of the conditions expressly mentioned in the section for its application. It has further been hel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of duty. Moreover, in cases where the requirement of proving the intention to evade duty is not satisfied proved then the question of invoking penalty clause would be impermissible. The language of rule 11AC is similar to rule 13(2) which has been interpreted by Hon'ble the Supreme Court in Rajasthan Spg. & Wvg. Mills 'case (supra). In that regard paras 18 and 19 of the judgment would be relevant which reads thus: "18. One cannot fail to notice that both the proviso to sub-section (1) of section 11A and section 11AC use the same expressions: '...by reasons of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade p ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
