2017 (4) TMI 273 - AT - Central Excise

Appeal dismissed due to Section 11AC not invoked in show cause notice.

Commissioner of C. Ex., Belgaum Versus Bellary Steels & Alloys Ltd.

Commissioner of C. Ex., Belgaum Versus Bellary Steels & Alloys Ltd. - 2017 (346) E.L.T. 156 (Tri. - Bang.) Issues:- Appeal against disallowance of Cenvat credit and imposition of penalty under Central Excise Act.Analysis:The appeal before the Appellate Tribunal CESTAT Bangalore involved a dispute regarding the disallowance of Cenvat credit and the imposition of a penalty by the Commissioner of Central Excise and Customs, Belgaum. The Commissioner had disallowed Cenvat credit amounting to Rs. 2,17,86,565 and imposed a penalty of Rs. 25,00,000. The appellant, represented by Shri J. Harish, contended that the penalty should be equal to the irregularly availed Cenvat credit as per Section 11AC of the Central Excise Act. However, it was noted that the Revenue had not invoked Section 11AC in the show cause notice issued to the respondent, M/s. Bellary Steels and Alloys Ltd. Instead, the penalty was imposed under Rules 25 and 27 of the Central Excise Rules, 2002, along with Rule 13 of the Cenvat Credit Rules, 2002. The Tribunal observed that since Section 11AC was not invoked in the SCN, the plea by the Revenue for an equivalent penalty was not legally tenable. Therefore, the Revenue's appeal to increase the penalty to the amount equivalent to the wrongly availed Cenvat credit was deemed unsustainable and rejected for lacking merit. Consequently, the appeal was dismissed on the grounds of lacking merit, and the original order disallowing the Cenvat credit and imposing the penalty was upheld. The judgment was pronounced in open court on 4-10-2016.