Personal penalty under Cenvat Credit Rules stayed at pre-deposit stage for lack of prima facie basis.

Rule 15 of the Cenvat Credit Rules, 2004 was read prima facie as not authorising personal penalties on individuals for an infraction attributable to an assessee. On that basis, the applicants were found to have made out a strong case for waiver of pre-deposit. The stay applications were allowed, recovery of the disputed amounts was stayed until disposal of the appeals, and the matters were directed to be listed before the Single Member Bench for final disposal.

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Issues: Whether penalties imposed on the applicants under Rule 15 of the Cenvat Credit Rules, 2004 could, at the stay stage, be sustained as personal penalties on individuals for an infraction attributed to an assessee, and whether waiver of pre-deposit was justified.

Analysis: On a reading of Rule 15 of the Cenvat Credit Rules, 2004, a prima facie view was taken that the rule could not be invoked to impose personal penalty on an individual for an infraction committed by an assessee. On that basis, the applicants were found to have made out a strong case for waiver of pre-deposit.

Outcome: The applications for waiver of pre-deposit were allowed and recovery of the amounts involved was stayed till disposal of the appeals. The appeals were directed to be listed before the Single Member Bench for disposal.

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