Tribunal reduces penalty for wire and cable manufacturers for Cenvat Credit Rule violation

The Tribunal reduced the penalty imposed on the appellants, wire and cable manufacturers, for failing to reverse 10% of the amount as required by Rule 6(6) of Cenvat Credit Rules, 2004, despite availing exemption. The appellants reversed the amount during adjudication but contested the penalty imposition, arguing a misunderstanding regarding the rule's applicability to exempted goods supplied through international bidding. The Tribunal acknowledged the genuine mistake, reducing the penalty from 100% to 10% due to procedural non-compliance, ultimately disposing of the stay petition and appeal.

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Issues:
1. Appellants availed exemption but did not reverse 10% amount as required by Rule 6(6) of Cenvat Credit Rules, 2004.
2. Show cause notice issued for non-reversal of amount, interest, and penalty.
3. Appellants reversed the amount during adjudication but sought non-imposition of penalty.
4. Dispute over the applicability of Rule 6(6) in case of exempted goods supplied against international bidding.
5. Revenue argued that ignorance of law is not an excuse and penalty under Rule 15(1) is justified.
6. Tribunal considered both sides' submissions and reduced the penalty imposed on the appellant.

Analysis:
1. The appellants, manufacturers of wire and cables, supplied goods to Delhi Metro under an exemption but failed to reverse 10% amount as required by Rule 6(6) of Cenvat Credit Rules, 2004, resulting in a show cause notice for non-compliance.
2. During adjudication, the appellants reversed the amount in question along with interest but requested non-imposition of penalty, citing lack of intention to evade duty and arguing that the Revenue was aware of the facts through regular returns.
3. The appellant's advocate acknowledged the demand but contended that they believed Rule 6(6) did not apply to exempted goods supplied against international bidding, seeking reduction of the penalty due to a genuine misunderstanding.
4. The Revenue argued that ignorance of the law is not a valid defense, insisting that the penalty under Rule 15(1) was justified, emphasizing the appellant's obligation to reverse the amount despite their belief.
5. The Tribunal upheld the demand and interest but agreed with the appellant's argument that the non-reversal was a genuine mistake, reducing the penalty from 100% to 10% of the duty amount due to procedural and technical non-compliance without malice, ultimately disposing of the stay petition and appeal accordingly.

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