Penalty equal to duty requires clear basis; prior finding of no mala fide intention led to remand for reconsideration.

Penalty equal to duty under Rule 13(2) of the Cenvat Credit Rules, 2002 read with Section 11AC could not be sustained where an earlier accepted finding recorded that the dispute was one of Modvat rule interpretation and that there was no mala fide intention. The Tribunal had imposed equal penalty for the later period without explaining why such punishment was warranted or assessing the nature and extent of the alleged default. The penalty was therefore set aside and the matter remitted for reconsideration of whether any penalty was imposable and, if so, to what extent.

---

---

Issues: Whether penalty equal to the duty was sustainable under Rule 13(2) of the Cenvat Credit Rules, 2002 read with Section 11AC of the Central Excise Act, 1944, and whether the question of penalty required reconsideration in light of the earlier finding that there was no mala fide intention.

Analysis: The earlier adjudication for the prior period had recorded that the dispute concerned interpretation of Modvat rules and that there was no evidence of misuse with mala fide intention, and the Revenue had accepted that order. For the subsequent period, the Tribunal imposed equal penalty without returning any finding as to why such penalty was warranted despite the earlier accepted finding and without examining the nature and extent of the alleged default. In these circumstances, the imposition of penalty equal to the duty could not be sustained as made.

Conclusion: The penalty imposed by the Tribunal was set aside, and the matter was remitted to the Tribunal to reconsider whether any penalty was imposable and, if so, to what extent.

---