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of <h1>Tribunal rules for appellants, reduces penalty to Rs. 1 lakh, questions validity of Rule 13(2) penalty</h1> <h3>M/s CROMPTON GREAVES LTD. Versus COMMISSIONER OF CENTRAL EXCISE, NASHIK</h3> M/s CROMPTON GREAVES LTD. Versus COMMISSIONER OF CENTRAL EXCISE, NASHIK - 2013 (296) E.L.T. 470 (Tri. - Mumbai) Issues:- Applicability of Rule 3(6)(a) of the Cenvat Credit Rules, 2002- Imposition of penalty under Rule 13(2) of the Cenvat Credit Rules, 2002- Willful intention to evade payment of duty- Validity of show-cause notice invoking Rule 13(2) post its omission- Interpretation of penalty provisions under Section 11AC of the Central Excise ActAnalysis:Applicability of Rule 3(6)(a) of the Cenvat Credit Rules, 2002:The case involved the appellants availing CENVAT Credit on inputs purchased from a 100% EOU, contrary to the restrictions outlined in Rule 3(6)(a) of the Cenvat Credit Rules, 2002. The appellants imported inputs and claimed credit on the CVD amount paid, leading to a dispute regarding the correct application of the rule.Imposition of penalty under Rule 13(2) of the Cenvat Credit Rules, 2002:A show-cause notice was issued for the appropriation of the amount paid along with interest and for the imposition of penalty under Rule 13(2) of the Cenvat Credit Rules, 2002. The adjudicating authority confirmed the demand and imposed a penalty, which was later reduced by the Tribunal but challenged by the Revenue.Willful intention to evade payment of duty:The Revenue argued that there was a willful intention to evade duty, citing the Supreme Court's decision in a relevant case. However, the appellants contended that there was no deliberate wrongdoing, as the excess credit was reversed upon detection by the Audit Party.Validity of show-cause notice invoking Rule 13(2) post its omission:The appellants raised a valid point regarding the omission of Rule 13(2) of the Cenvat Credit Rules through a notification dated 1.3.2003, questioning the sustainability of the penalty imposed based on a provision that was no longer in effect at the time of the notice.Interpretation of penalty provisions under Section 11AC of the Central Excise Act:The Tribunal analyzed the penalty provisions under Section 11AC of the Central Excise Act in light of the Supreme Court's interpretation in a specific case. It was emphasized that the imposition of penalty under this section requires a deliberate act of deception by the assessee with the intent to evade duty, which was found lacking in the present case.In conclusion, the Tribunal found that there was no willful misstatement or suppression of facts with intent to evade duty in the appellants' actions. Moreover, the invocation of Rule 13(2) post its omission raised concerns about the validity of the penalty imposed. The Tribunal upheld the reduction of the penalty to Rs. 1 lakh and determined that the appellants were not entitled to a refund of the penalty already paid.
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