Cenvat credit on duty paid after detection of evasion is inadmissible; personal penalty needs a specific attributable role.

Cenvat credit was held inadmissible where duty on molasses cleared for captive consumption was paid only after departmental detection of evasion and invocation of the extended period, because the applicable Cenvat Credit Rules, 2002 did not permit credit on duty linked to suppression, fraud, collusion or misstatement. The demand, interest and equivalent penalty were therefore upheld against the manufacturer. By contrast, the personal penalty on the distillery in-charge was set aside because the record did not show a specific attributable role beyond a general assertion of awareness, and personal penalty cannot rest on that alone.

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Issues: (i) Whether cenvat credit could be availed on duty paid after detection of evasion and in respect of molasses consumed captively for manufacture under exemption; (ii) Whether the personal penalty imposed on the distillery in-charge was sustainable.

Issue (i): Whether cenvat credit could be availed on duty paid after detection of evasion and in respect of molasses consumed captively for manufacture under exemption.

Analysis: The duty on molasses cleared for captive consumption had been paid only after departmental detection and invocation of the extended period. The credit was taken on the same amount despite the payment arising from confirmed duty evasion. The applicable Cenvat Credit Rules, 2002 did not permit credit where duty had been paid after suppression, fraud, collusion or misstatement was found.

Conclusion: The credit was inadmissible and the confirmation of duty demand, interest and equivalent penalty was upheld against the main appellant.

Issue (ii): Whether the personal penalty imposed on the distillery in-charge was sustainable.

Analysis: No specific role was attributed to the individual beyond a general assertion that he was in charge and aware of the credit availment. The record did not establish sufficient basis for personal penalty.

Conclusion: The personal penalty was unsustainable and was set aside in favour of the individual.

Final Conclusion: The main appeal failed on the credit and penalty dispute, while the connected individual appeal succeeded on the personal penalty issue.

Ratio Decidendi: Cenvat credit cannot be taken on duty paid after detection of evasion involving suppression or similar misconduct, but personal penalty requires a specific attributable role and cannot rest on a bare assertion of awareness.

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