2013 (7) TMI 24

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....peal was admitted on the following substantial questions of law:- "(1) Whether the Tribunal is correct in setting aside the penalty imposed under Rule 13 of CENVAT Credit Rules, 2002 when the assesee made an offence by retaining this wrongful CENVAT credit for a period of six months which resulted in unwarranted financial accommodation in contravention of the CENVAT Credit Rules, 2002 and are liable for penal action as per Rule 13(1) ibid? (2) Whether the Tribunal is correct in setting aside the penalty imposed, when the question of "imposition of penalty equivalent to the amount of duty evaded under Section 11AC of the Central Excise Act, whether maximum or not and of discretion to impose lesser amounts" itself is pending in appeal b....

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....ows that except for mere reference to the proposal to levy penalty under Section 13(1) of CENVAT Credit Rules, 2002, there is no discussion as regards the various requirements which are necessary for the purpose of levy of penalty under Section 11AB of Central Excise Act 1944. 3. A reading of the order of the Commissioner shows that he confirmed the levy of penalty observing that the reversal of the credit made by the assessee after detection of the case clearly established the intention to cause wrongful gain warranting imposition of penalty. Thus even if any credit was reversed before the issuance of show cause notice, it being made after the detection, penalty was leviable under Section 11AB of Central Excise Act, 1944. Thus, ultimate....

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....e decision of the Apex Court reported in 2009 (238) E.L.T. 3(SC) UNION OF INDIA v. RAJASTHAN SPINNING & WEAVING MILLS referred to the decision of the Apex Court reported in 2008 (231) E.L.T. 3 (S.C) UNION OF INDIA v DHARAMENDRA TEXTILE PROCESSORS, wherein, the Apex Court pointed out that the application of Section 11AC would depend upon the existence or otherwise of the conditions expressly stated in the section, once the section is applicable, the concerned authority would have no discretion in quantifying the amount and penalty must be imposed equal to the duty determined under sub-section (2) of Section 11A. In so holding, the Apex Court held that in every case of non payment or short payment of duty, penal provisions cannot be automatic....