TaxTMI 
TaxTMI 
2011 (2) TMI 553
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....pectively of Central Excise Tariff Act, 1985. The appellants are registered under Central Excise and are availing the facility of Cenvat credit under provisions of Cenvat Credit Rules, 2004. 2.1 On verification of the records of the appellant by the department officers, it was observed that the said unit had a co-generation plant for production of electricity in their factory premises. The electricity so produced was found to be used in the factory of production. The excess power generated is being supplied to the state Electricity Board for a price. As the electricity produced in the factory did not attract payment of Central Excise duty and as they had not maintained any separate accounts for receipt, consumption and inventory of ....
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....ing the amount of penalty imposed by the adjudicating authority under Section 11AC and upheld by the Commissioner (Appeals). He would submit that during the relevant period, provisions of Rule 6 of CENVAT Credit Rules, 2004, are not applicable in this case as the credit sought to be denied by the lower authorities is in respect of credit of Service Tax paid on input services. He would draw my attention to Rule 15 of the CENVAT Credit Rules, 2004. It is also his submission that the said Rule has been amended from 27-2-2010 wherein provisions of Rule 15(2) and (3) included the input services on which credit has been wrongly availed. He would submit that before the amendment, Rule 15(3) will only be applicable and at the most they are liable f....
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.... as stated in the impugned order the department can impose penalty equal to the duty demanded under section 11AC of Central Excise Act, 1944." 7. It can be seen from the relevant paragraphs of the impugned order, that the appropriate provisions of Rule 15 of the CENVAT Credit Rules, 2004 as it was before amendment were not correctly appreciated. The said Rule reads as under :- Rule 15 of CENVAT Credit Rules, 2004 - pre-Amendment 15. Confiscation and Penalty (1) If any person, takes CENVAT credit in respect of input or capital goods, wrongly or in contravention of any of the provisions of these rules in respect of any input or capital goods, then, all such goods shall be liable to confiscation and suc....
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.... (1), sub-rule (2), sub-rule (3) or sub-rule (4) shall be issued by the Central Excise Officer following the principles of natural justice". 8. On a mere perusal of the above reproduced rules, it can be seen that provisions of sub-rule (2) can be brought into picture only where Cenvat credit, of duty on inputs or capital goods is availed on account of fraud, willful misstatement. Provisions of sub-rule (3) can be brought into play for denial of CENVAT credit of input services and penalty can be imposed as indicated therein prior to amendment. It is seen that provisions of Section 11AC of Central Excise Act or Rule 15(2) could not be invoked, as the issue was of credit on input services. At the most, for the violations of availing in....