2011 (9) TMI 505

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....proceeded to decide the appeal.   In this Central Excise Appeal filed by the department under Section 35-G of the Central Excise Act, following substantial question of law arises for consideration of the Court:-   "Whether the penalty under Section 11 AC of the Central Excise Act, 1944, can be exempted when there was suppression of fact and recovery was confirmed under proviso to Section 11 (A) (1) of the Act?"   Sri S.P. Kesarwani submits that the Customs Excise and Service Tax Appellate Tribunal has erred in law in holding that since the Cenvat Credit, which was not due to the appellant, was debited before issuance of the notice, imposition of penalty under Section 11 AC was not sustainable.   Paras 3, 4 and 5 of t....

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....ed in 2007 (214) ELT 506 (Raj.) held that short levy of duty deposited by the assessee before issue of show cause notice, imposition of penalty of equal amount under Section 11 AC of the Act is not maintainable. In the present case, the contention of the appellant that they are eligible for credit and in order to avoid legal complicity, they have deposited the duty long before issue of show cause notice. Hence I do not find any reason for imposition of penalty under Section 11 AC of the Act. Accordingly, penalty is set aside. The appeal is allowed with consequential relief."   Sri S.P. Kesarwani submits that the Tribunal has clearly failed to take into account that the Cenvat credit was not returned voluntarily. The assessee reversed ....

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....ntral Excise duty of Rs.23,331.15 and Rs.26,763.57 (Total Rs.50,094.72) respectively. The party No. 1 had availed Cenvat Credit amounting to Rs.50,095/- vide RG 23-C part-II, entry No. 19 and 20 dated 13.10.2011 on the above mentioned 21.60 M.T. of scrap G.C Sheet, which were inadmissible to them since the sheets were intended for use in plant and buildings and as such were not eligible for CENVAT credit as capital goods, when used for building works/office equipment.   1.2.1. On pointing out the same, the Party No.1 promised to reverse the Credit vide their letter dated 14.9.2002 but they did not reverse the same. they have violated provisions of Rules 57 Q of Central Excise Rules 1944, because the Capital Goods used for office equip....

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....y No.2) under Section 11AB of the Act ibid."   Sri S.P. Kesarwani has relied upon Union of India vs. Rajasthan Spinning and Weaving Mills [2009 (238) ELT 3 (S.C.)] in which the Supreme Court held in para 2 as follows:-   "2. What are the conditions and the circumstances that would attract the imposition of penalty under section 11AC of the Central Excise Act ('The Act', hereinafter)? In the two cases before us the Tribunal has taken the view that there was no warrant for levy of penalty since the assessees had deposited the balance amount of excise duty (that was short paid at the first instance) even before the show cause notice was issued. On the other hand, on behalf of the Revenue, the appellants in the two appeals, it was c....