2008 (9) TMI 695 - AT - Central Excise

Tribunal reduces penalty under Central Excise Act, citing prompt error rectification.

The Tribunal upheld the decision of the Commissioner (Appeals) to reduce the penalty under Section 11AC of the Central Excise Act, 1944, from Rs. 6,18,944 ... Penalty - Quantum of - Cenvat/Modvat Issues: Appeal against reduction of penalty under Section 11AC of Central Excise Act, 1944.Analysis:The appeal was filed by the Revenue against the Order-in-Appeal reducing the penalty on the respondents. The main contention was that the penalty was reduced to Rs. 5000 instead of the equal amount of Rs. 6,18,944 as per Section 11AC of the Central Excise Act, 1944. The Revenue argued that the impugned order was incorrect and referred to various Tribunal decisions to support their claim. The learned JDR emphasized that the penalty of Rs. 5000 was insufficient considering the confirmed duty amount. On the other hand, the respondent's consultant supported the impugned order, stating it was correct. The impugned order was related to the non-imposition of a penalty of Rs. 16,250. After reviewing the submissions, the Commissioner (Appeals) concluded that the penalty should be reduced to Rs. 5000 based on the facts and circumstances of the case and in line with relevant case laws and circulars issued by the Board.The Commissioner (Appeals) relied on various Tribunal decisions in reaching the conclusion. It was noted that the show cause notice sought to impose a penalty under Rule 15 of the Cenvat Credit Rules, 2004, along with Section 11AC of the Central Excise Act, 1944. The Commissioner found that imposing an equal penalty amount was not justified in this case as the respondent had availed Cenvat credit on Service Tax based on debit notes issued by the consignee, which was promptly reversed upon identification of the error. The Commissioner concluded that there was no need to invoke Section 11AC as the issue of wrongful credit availed was rectified promptly after identification, indicating a misunderstanding of the law rather than intentional non-compliance.In light of the above analysis, the Tribunal found that the impugned order of the Commissioner (Appeals) was well-reasoned and free from any defects. Consequently, the appeal filed by the Revenue was rejected, affirming the decision of the Commissioner (Appeals).