Tribunal Upholds Capital Goods Confiscation, Reduces Fine, Sets Aside Penalty

The Tribunal upheld the confiscation of capital goods, reduced the redemption fine to Rs. 2.00 lakhs, and set aside the penalty imposed under Rule 15(2) of Cenvat Credit Rules, 2004. The appellant's appeal was allowed regarding the penalty as the Tribunal found no intention to evade duty, a primary requirement for invoking Rule 15(2).

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Issues:
Confiscation of capital goods, redemption fine, imposition of penalty under Rule 15(2) of Cenvat Credit Rules, 2004.

Confiscation of Capital Goods and Redemption Fine:
The appellant availed excess credit in February 2008, which was noticed as the credit was availed a third time despite being availed twice before. A show cause notice was issued for demanding balance interest, confiscating capital goods, imposing a penalty, and a redemption fine. The adjudicating authority confirmed the demand, imposed a penalty, and redemption fine. The first appellate authority upheld the decision but dropped the interest liability. The Tribunal noted that the appellant availed credit for the third time against received capital goods, which was reversed upon audit party's pointing out. The Tribunal upheld the reversal of Cenvat credit and found no interference necessary in the first appellate authority's decision. However, the redemption fine was reduced to Rs. 2.00 lakhs due to the appellant's reversal of credit.

Imposition of Penalty under Rule 15(2) of Cenvat Credit Rules, 2004:
The Tribunal examined the appellant's appeal contesting the penalty under Rule 15(2) of Cenvat Credit Rules, 2004. The appellant argued that the excess credit was not utilized for discharging duty and that there was no intention to evade duty. Documentary evidence showed a closing balance of approximately Rs. 70.00 lakhs and a monthly utilization of around Rs. 3.00 lakhs. The Tribunal found that the alleged violation did not indicate an intention to evade duty, which is a primary requirement for invoking Rule 15(2). Consequently, the Tribunal concluded that Rule 15(2) would not apply in this case and set aside the penalty imposed under this provision, allowing the appeal on this point.

Conclusion:
The Tribunal disposed of the appeal by upholding the confiscation of capital goods, reducing the redemption fine, and setting aside the penalty imposed under Rule 15(2) of Cenvat Credit Rules, 2004.

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