2024 (10) TMI 1335 - AT - Central Excise

Employee cannot be penalized under Rule 15(1) of Cenvat Credit Rules for not personally utilizing credit benefits

Mahesh R Sharma Versus C.C.E & S.T. -Silvasa

CESTAT Ahmedabad allowed the appeal against penalty imposed under Rule 15(1) of Cenvat Credit Rules, 2004 on an employee. The tribunal held that penal ... Levy of penalty under Rules 15 (1) of the Cenvat Credit Rules, 2004 on an employee who did not avail or utilize Cenvat Credit - HELD THAT:- The penal provision provided under Rules, 15 of the Cenvat Credit Rules, 2004 clearly mentioned that penalty imposable of the person who takes of utilises Cenvat Credit in respect of input or capital goods or input service. It is found that the appellant has been working only as a employee of the main noticees, he has neither taken Cenvat Credit himself or utilize the same for its own purposes for payment of the duty and therefore, the penal provisions has provided under Rules, 15(1) of the Cenvat Credit Rules, 2004 are not invokable in this case. Reliance placed upon this Tribunal decision in case of SHRI PRANATHARTHIHARAN SRIDHARAN VERSUS COMMISSIONER OF CENTRAL EXCISE & ST, VADODARA-I [2023 (3) TMI 1123 - CESTAT AHMEDABAD] where it was held that 'penalty under Rule 15(1) on the present appellant, who is merely an employee of the Company, is not sustainable.' The impugned order in Original is without any merit so far as imposition of penalty on the appellant is concerned - appeal allowed. Issues:Imposition of penalty under Rule 15(1) of the Cenvat Credit Rules, 2004 on an employee who did not avail or utilize Cenvat Credit.Detailed Analysis:Issue 1: Imposition of Penalty under Rule 15(1) of the Cenvat Credit Rules, 2004The appellant challenged the imposition of a penalty of Rs. 8 Lakhs under Rule 15(1) of the Cenvat Credit Rules, 2004, despite not availing or utilizing the Cenvat Credit personally. The appellant argued that as an employee, he did not take or utilize the credit, and therefore, should not be penalized under Rule 15(1). The Tribunal examined Rule 15(1), which states that a person shall be liable to penalty if they take or utilize Cenvat Credit in contravention of the rules. The Tribunal referred to a previous decision where it was held that personal penalty under Rule 15 of CCR, 2004 should not be imposed on employees unless they themselves availed the credit. The Tribunal emphasized the strict interpretation of penal provisions and the necessity to mention the specific provision in the notice for proper defense. Consequently, the Tribunal set aside the penalty imposed on the appellant, ruling that it was not sustainable under Rule 15(1) of the Cenvat Credit Rules, 2004.Conclusion:The Tribunal, after thorough analysis and consideration of legal provisions and precedents, concluded that the imposition of the penalty on the appellant under Rule 15(1) of the Cenvat Credit Rules, 2004 was unjustified. The Tribunal set aside the penalty, allowing the appeal in favor of the appellant.