Penalty equal to wrongly availed Cenvat credit requires Section 11AC notice; enhancement was rejected.

A penalty equal to wrongly availed Cenvat credit cannot be imposed when the show cause notice does not invoke Section 11AC of the Central Excise Act, 1944. The notice proceeded under Rules 25 and 27 of the Central Excise Rules, 2002 and Rule 13 of the Cenvat Credit Rules, 2002, so a demand for equivalent penalty based only on Section 11AC was held legally untenable. The Revenue's request to enhance the penalty to the amount of credit availed was therefore rejected, and the appeal failed.

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Issues: Whether the penalty could be enhanced to an amount equivalent to the wrongly availed Cenvat credit when Section 11AC of the Central Excise Act, 1944 was not invoked in the show cause notice.

Analysis: The Tribunal noted that the show cause notice did not invoke Section 11AC of the Central Excise Act, 1944 and instead proceeded under Rules 25 and 27 of the Central Excise Rules, 2002 along with Rule 13 of the Cenvat Credit Rules, 2002. Since the demand for an equivalent penalty was sought only on the basis of Section 11AC, and that provision had not been put in issue in the notice, the request for enhancement of penalty was held to be legally untenable.

Conclusion: The Revenue's plea for imposing penalty equivalent to the wrongly availed Cenvat credit was rejected and the appeal failed.

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