Penalty for alleged CENVAT credit suppression failed where the Revenue could not prove actual credit availment or concealment.

Penalty under Section 11AC of the Central Excise Act, 1944 was not sustainable where the Revenue failed to prove, with evidence, that CENVAT credit had actually been availed on capital goods cleared as scrap. The assertion that the goods were capital goods on which credit had been taken was insufficient without proof of availment. As the burden to establish suppression of facts lay on the Revenue and was not discharged, the allegation of suppression failed and the penalty was rightly set aside.

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Issues: Whether penalty under Section 11AC of the Central Excise Act, 1944 was sustainable when the Revenue failed to establish, with evidence, that CENVAT credit had been availed on the capital goods cleared as scrap and that there was suppression of facts.

Analysis: The challenge was confined to the penalty. The Revenue asserted that the capital goods were cleared as scrap without payment of duty after availing CENVAT credit, attracting Rule 3(5A) of the CENVAT Credit Rules, 2005. However, beyond the assertion that the cleared goods were capital goods on which credit had been taken, there was no evidence to prove actual availment of CENVAT credit. Since the burden to prove suppression lay on the Revenue and that burden was not discharged, the charge of suppression could not be sustained.

Conclusion: Penalty under Section 11AC of the Central Excise Act, 1944 was not attracted and was rightly set aside.

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