Successful appeal reduces penalties for inadmissible Cenvat credit, setting aside personal penalty based on legal precedents

The appellant successfully appealed against penalties imposed on them for inadmissible Cenvat credit on certain inputs. The court ruled in favor of allowing the appellant to pay a reduced penalty of 25% within 30 days, even without the initial option. The penalty on the main appellant was reduced to 25% of the duty paid, and the personal penalty on a partner was set aside based on a Gujarat High Court decision. The impugned order was set aside, modifying penalties to 25% for the main appellant and annulled for the partner, in line with legal precedents and provisions cited in the judgment.

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Issues:
Appeal against penalties imposed on appellant, challenge regarding penalty reduction under Section 11AC of the Act, imposition of personal penalty under Rule 26 of the Central Excise Rules, 2002 on another appellant, applicability of proviso to Section 11AC, reduction of penalties, partnership firm liability for penalties.

Analysis:
The appellant appealed against penalties imposed on them, seeking relaxation as per impugned orders. The case involved inadmissible Cenvat credit on certain inputs, leading to penalties under Section 11AC of the Act and Rule 26 of the Central Excise Rules, 2002. The appellant contested the penalties, arguing that they were not given the option to pay 25% of duty as penalty within 30 days of the adjudication order, as mandated by the proviso to Section 11AC. Additionally, it was claimed that the personal penalty on one appellant, a partner of the main appellant, was not valid based on a Gujarat High Court decision.

Upon hearing the parties, the judge noted the absence of the option to pay reduced penalty within the specified time frame. Citing a Supreme Court decision, the judge ruled in favor of allowing the appellant to pay a reduced penalty of 25% if paid within 30 days of the order, even without the initial option. The penalty on the main appellant was reduced to 25% of the duty paid by them, subject to timely payment, failing which full penalty would apply as per Section 11AC.

Regarding the personal penalty on the partner of the main appellant, the judge referred to the Gujarat High Court decision, which stated that if a penalty is imposed on the firm, no separate penalty can be imposed on its partner. Following this precedent, the penalty on the partner was set aside. Consequently, the impugned order was set aside, and the penalties were modified as follows: 25% penalty on the main appellant if paid within 30 days, and the penalty on the partner was annulled. Both appeals were disposed of accordingly, adhering to the legal precedents and provisions cited in the judgment.

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