Tribunal cancels penalty for excess Cenvat Credit reversal on PPE medicament manufacturer The Tribunal set aside the penalty imposed under Section 11AC of the Central Excise Act, 1944 on the appellant, a manufacturer of PPE medicaments, for ...
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Tribunal cancels penalty for excess Cenvat Credit reversal on PPE medicament manufacturer
The Tribunal set aside the penalty imposed under Section 11AC of the Central Excise Act, 1944 on the appellant, a manufacturer of PPE medicaments, for excess reversal of Cenvat Credit. The Tribunal found no intent to evade duty and noted correct credit reversal before the show cause notice. It held that there was no fraud or wilful misstatement to warrant the penalty, ultimately ruling in favor of the appellant and partially allowing the appeal.
Issues involved: Appeal against imposition of penalty under Section 11AC of Central Excise Act, 1944 for excess reversal of Cenvat Credit without intent to evade payment of duty.
Summary: The appellant, engaged in manufacturing PPE medicaments, faced a show cause notice for wrongly availed Cenvat Credit of Rs. 11,39,242 as they did not maintain separate accounts for trading activity. The Commissioner (Appeals) reduced the demand and penalty, but the appellant still contested the penalty imposition. The appeal focused on whether the penalty was justified for the excess reversal of Cenvat Credit. The appellant argued that there was no intent to evade duty and the reversal was correct per Rule 6 (3) (ii) of CCR, 2004, done before the show cause notice. The Department, however, claimed suppression of facts and contravention of rules to evade duty.
The Tribunal noted that the appeal's main concern was the penalty imposition, not the merits of the case or Rule 6 applicability. It acknowledged the correct reversal of Cenvat Credit before the notice issuance. Referring to Section 11AC, the Tribunal found no grounds for penalty imposition as there was no fraud, collusion, or wilful misstatement to evade duty. The Commissioner's contradictory findings on the appellant's compliance with rules further supported setting aside the penalty. Ultimately, the Tribunal held that the penalty imposition was unjustified and set it aside, partially allowing the appeal.
[Order dictated & pronounced in the open Court]
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