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2016 (5) TMI 658 - CESTAT KOLKATA

2016 (5) TMI 658 - CESTAT KOLKATA - 2016 (340) E.L.T. 373 (Tri. - Kolkata) - Imposition of penalty - Rule 57I (4) read with Rule 173Q (1) (bb) of the Central Excise Rules, 1944 - Cenvat credit wrongly taken on inputs as soon as duty paying documents were received - No intention/suppression to evade Central excise duty - Held that:- as per the procedure prescribed by the Department, credit with respect to inputs can be taken only on receipt of the finished products/intermediate goods from the job .....

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evidences, bench is of the considered opinion that penalty upon the appellant is imposable under Rule 173Q (1) (bb) of the Central Excise Rules, 1944. However, appellant has only gained in taking Cenvat Credit for a few months because all the consignments have been received by the appellant for further processing within the prescribed time limit. Therefore, a penalty of ₹ 10,000/- upon the appellant will meet the ends of justice. - Decided in favour of appellant by reducing the penalty - E .....

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s imposed by the adjudicating authority under Rule 57I (4) read with Rule 173Q (1) (bb) of the Central Excise Rules, 1944. 2. Shri N.K. Choudhary, Advocate appearing on behalf of the appellant argued that the credit of ₹ 7,27,084/- was taken by the appellant during the period June, 1993 to August, 1994 immediately on receiving of documents when the inputs were directly sent to the job worker from the purchaser. That as per CBEC Circular No. 265/99/96-CX dated 12/11/1996, Cenvat Credit on i .....

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f Central Excise Rules, 1944. Ld. Advocate also relied upon the following case laws to argue that the penalty in the present case cannot be imposed under Rule 57I (4) of Central Excise Rules, 1944 as there was no intention to evade Central Excise duty: i) Ashok Leyland Vs. Commr. of Central Excise, Chennai-2008 (232) ELT 111 (Tri.-Chennai) ii) Commr. of C. Ex., Ludhiana Vs.-Steel Strips Ltd. -2008 (221) ELT 193 (P&H) iii) A.R.A.S. Motors (P) Ltd. -Comm. Of Central Excise, Madurai-2014 (33) S .....

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a Steel Ltd. 1996 (82) ELT 441 (SC) a wrong provision of law mentioned in the Show Cause Notice/addendum does not invalidate imposition of penalty. That both penal provisions of Rule 57I (4) and Rule 173Q (1) (bb) of Central Excise Rules, 1944 were invoked in the Adjudication order to first appellate authority has held that penalty under Rule 173Q (1) (bb) is imposable. 4. As a counter to the above arguments made by A.R., Ld. Advocate appearing on behalf of appellant argued that as per the provi .....

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taking Cenvat Credit of ₹ 7,27,084/- is highly excessive. 5. Heard both sides and perused the case records. The issue involved in this appeal is whether penalty under Rule 173Q (1) (bb) of the Central Excise Rules, 1944 is imposable upon the appellant for takin credit on inputs as soon as duty paying documents were received. It is observed from the case records that as per the procedure prescribed by the Department, as discussed by the adjudicating authority on page 5 of the Order-in-Orig .....

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es is reproduced below: 173Q Confiscation and Penalty :- (1) Subject to the provisions contained in section 11AC of Act and sub-rule (4) of rule 57I and sub-rule (6) of rule 57U, if any manufacturer, producer, registered person of a warehouse or a registered dealer- (a) Removes any excisable goods in contravention of any of the provisions of these rules; or (b) Does not account for any excisable goods manufactured, produced or stored by him; or (bb) takes credit of duty or money in respect of in .....

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duty or money which he knows or which he has reason to believe, is not permissible under these rules, or does not utilize the inputs or capital goods in the manner provided for in these rules, or utilizes credit of duty or money in respect of inputs or capital goods in contravention of any of the provisions of these rules, or does not render proper and true account of the receipt and disposal of the said inputs or capital goods and the credit of duty or money taken thereon as required under thes .....

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ravention of the nature referred to in clause (a) or clause (b) or clause (bb) or clause (bbb) or clause (c) or clause (d) has been committed or five thousand rupees, whichever is greater. Explanation : For the purposes of clause (bb) of sub-rule (1), a person availing of credit of duty on inputs received by him shall be deemed to have taken reasonable steps if he satisfies himself about the identity and address of the manufacturer or supplier, as the case may be, issuing the invoice or any othe .....

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