Revenue appeals dismissed as penalty under Rule 15(3) requires fraud or suppression, not mere credit availment

CESTAT Ahmedabad dismissed revenue's appeals challenging non-imposition of penalty under Rule 15(3) of Cenvat Credit Rules, 2004. The tribunal held that penalty under Rule 15(3) requires fraud, collusion, willful mis-statement or suppression of facts with intent to evade service tax. Since the department was aware of appellant's cenvat credit availment and subsequent show cause notices were issued after the first notice decided by Gujarat HC in appellant's favor, there was no suppression of facts. The adjudicating authority correctly determined penalty provisions were not invokable, making revenue's appeals non-maintainable.

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Issues involved:
The judgment involves the contestation of non-imposition of penalty under Rule 15(3) of Cenvat Credit Rules, 2004 against the confirmation of duty demand of cenvat credit availed on various services and goods.

Imposition of Penalty - Revenue's Appeal:
The Revenue appealed against the non-imposition of penalty under Rule 15(3) of Cenvat Credit Rules, 2004, alleging mala fide intention on the part of the respondent for continuously availing cenvat credit despite an initial order against them. The Revenue argued that the respondent was liable for penalty under Rule 15(3) due to this alleged intentional wrongdoing.

Response to Penalty Imposition - Respondent's Defense:
The Respondent contended that as per a Tribunal order, the demand had been set aside, rendering the basis for imposing penalty under Rule 15(3) unfounded. They argued that all show cause notices were issued within the normal period, indicating no suppression of facts. The Respondent further highlighted that subsequent show cause notices did not meet the criteria for imposing penalty under Rule 15(3) independently on merit.

Judicial Consideration and Decision:
The Tribunal carefully considered both sides' submissions and examined the records. It noted that since the demand for cenvat credit had been set aside, the proposal for imposing penalty under Rule 15(3) was no longer applicable. The Tribunal analyzed the relevant Rule 15(3) and concluded that the penalty could only be imposed in cases of fraud, collusion, willful misstatement, or suppression of facts, none of which were established in this case. The Tribunal aligned with the Adjudicating Authority's decision not to impose the penalty under Rule 15(3) and cited a Supreme Court judgment in support of this stance. Consequently, the Tribunal found that the penalty under Rule 15(3) was not imposable due to the non-existence of the demand and lack of merit independently.

Final Decision:
Based on the above analysis, the Tribunal ruled that the Revenue's appeals were not maintainable and subsequently dismissed them. The judgment was pronounced in open court on 23.08.2023.

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