2009 (9) TMI 762 - AT - Central Excise

Court affirms dismissal of Revenue's appeal on Cenvat credit excess; penalty limit clarified

The court affirmed the dismissal of the Revenue's appeal against the order-in-appeal regarding excess Cenvat credit claimed by the respondent. The judge ... - Issues:1. Excess Cenvat credit claimed by the respondent.2. Imposition of penalty under Section 11AC read with Rule 13 of Cenvat Credit Rules.3. Review appeal filed by the Department regarding the quantum of penalty.4. Dismissal of Department's appeal by the Commissioner (Appeals).5. Appeal filed by the Department against the order-in-appeal.Analysis:1. The Department alleged that the respondent had taken excess Cenvat credit of Rs. 3,074, which was later paid back with interest upon discovery. Despite the repayment, a show cause notice was issued for confirmation of the demand and penalty imposition.2. The Assistant Commissioner imposed a penalty of Rs. 3,074 under Section 11AC along with Rule 13 of the Cenvat Credit Rules. The Department, dissatisfied with the penalty amount, filed a review appeal before the Commissioner (Appeals) citing that Rule 13 prescribes a minimum penalty of Rs. 10,000.3. The Commissioner (Appeals) in the order-in-appeal dismissed the Department's appeal, leading to the current appeal by the Department. During the hearing, only the Departmental Representative was present, reiterating the grounds of appeal.4. The judge, after considering the submissions and records, noted that when a penalty is imposed under Section 11AC equal to the duty evaded, it cannot exceed the Cenvat credit amount confirmed. The judge clarified that Rule 13 sets an upper limit, not a minimum penalty, and when Section 11AC is invoked, Rule 13 does not apply. Consequently, the judge found no merit in the Revenue's appeal and dismissed it.5. The judgment was dictated and pronounced in open court, affirming the dismissal of the Revenue's appeal against the order-in-appeal.