Tribunal revokes penalties under Section 11AC, citing appellant's prompt corrective action. Upheld duty demand & interest.

The tribunal set aside penalties imposed under section 11AC of the Act in a case involving violations of CENVAT Credit Rules. While upholding duty demand and interest, the tribunal revoked penalties due to the appellant's prompt reversal of credit and duty payment, indicating no intent to evade duty. The decision partially allowed the appeal, emphasizing the lack of deliberate wrongdoing in transferring goods without proper procedures and availing double credit.

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Issues:
Violation of Rule 3(5) of CENVAT Credit Rules, 2004 - Transfer of capital goods/inputs without payment of duty and without raising challans. Double credit availed on invoices. Non-payment of duty on manufactured goods cleared. Imposition of penalty under section 11AC of the Act.

Analysis:
The case involved the appellants, engaged in manufacturing switch gear, availing CENVAT credit on inputs, capital goods, and input services. An investigation revealed the transfer of goods to another unit without duty payment or proper documentation, double credit availed on invoices, and non-payment of duty on cleared goods. A show cause notice was issued, leading to confirmation of demands and penalties by the original authority and Commissioner (Appeals).

The appellant contested only the penalty imposition, not the demand or interest. They argued that the transfer was due to establishing a new factory, and the credit was reversed promptly upon departmental intervention. The appellant claimed the procedural lapse was unintentional, with no intent to evade duty payment. The appellant requested the penalties be set aside based on the early reversal of credit and duty payment.

The department reiterated the findings, emphasizing the violations and justifying the penalties imposed. The appellant's actions were deemed as breaching the law by transferring goods without proper procedures and availing double credit. The department argued that penalties were warranted given the violations.

After hearing both sides, the tribunal noted the appellant's admission of procedural lapses but highlighted the timely reversal of credit and duty payment. The tribunal found no evidence of intent to evade duty payment, leading to the setting aside of penalties under section 11AC of the Act. The duty demand and interest were upheld, while the penalties were revoked, partially allowing the appeal.

In conclusion, the tribunal modified the impugned order by setting aside the penalties imposed under section 11AC, maintaining the duty demand and interest. The decision emphasized the lack of intent to evade duty payment, resulting in the partial allowance of the appeal.

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