AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2026 (1) TMI 320
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....mittee of Chief Commissioners under section 35E of Central Excise Act, 1944, is limited to the non-imposition of penalty under section 11AC, in conjunction with rule 15 of CENVAT Credit Rules, 2004, on recovery of Rs. 63,67,519 confirmed under rule 14 of CENVAT Credit Rules, 2004. The dispute, in its original and wider form [show cause notice dated 26th July 2007], came up before the Tribunal on two occasions upon which the entirety of matters, relating to credit of duty paid on 'inputs' used for manufacture of 'cosmetic preparations containing alcohol' - a non-excisable commodity - ordered [order-in-original no. 03/CEX/2008 dated 27th February 2008] to be recovered with like penalty and retention of credit of tax on 'input services' attrib....
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....taken note off in the very first round of adjudication in addition to Rs. 76,88,567 from out of Rs. 3,59,43,559 proposed to be recovered for wrongful availing of credit of tax paid on 'input services' to the extent attributable to volume of trading in the total turnover. On conclusion of proceedings for the second time, the impugned order, while confirming liability of Rs. 63,67,519, along with applicable interest, dropped penalty of like amount originally proposed in relation to the former. 3. According to Learned Authorized Representative, the adjudicating authority had no option but to invoke section 11AC of Central Excise Act, 1944 upon ordering recovery of duties of central excise under section 11A of Central Excise Act, 1944. It wa....
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....isable goods and 'input service' attributable to trading undertaken by the respondent. There is no allegation in the show cause notice that these credits were barred under rule 3 of CENVAT Credit Rules, 2004 or that the impugned 'inputs' were identifiable, from the very beginning, as suitable for deployment in the manufacture of only non-excisable goods. Consequently, the breach of CENVAT credit scheme could, at best, be the retention once so deployed for manufacture of non-excisable goods. It may not be out of place to take note that the bar on retention, mandated in rule 6 (1) of CENVAT Credit Rules, 2004, is governed by the precedence assigned to rule 6(2) therein and that the mandated reversal, by any of the methods, in rule 6 (3) of CE....
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....f Rule 6(3)(b) of the CCR, 2004, albeit mistakenly. Although, the assessee have departed from the procedure required to be followed by them, I find that they have ended up paying more duty than what was legally required to be paid. Further, I find that this is a clear case of mis-interpretation of law because the assessee appears to have confused the words 'exempted goods' as appearing in Rule 6(3)(b) of the CCR, 2004, with the words 'non-excisable goods'. Although, in real terms, the non-excisable goods are also exempted from payment of Central Excise duty, in the context of CCR, 2004, no credit is per se admissible on inputs used in the manufacture of non-excisable goods. Further, this mistake has been accepted by the asse....
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....mendra Textile Processors - 2008-TIOL-192-SC-LB, the Hon'ble Supreme Court, while holding that mens rea is not an essential element for imposing penalty for breach of civil obligations, has also observed that " It is delinquency of the defaulter itself which establishes his blameworthy conduct without any further proof of the existence of mens rea.' In the instant case, I find that there has not been any deliberate default in payment of any duty due to the department, but a wrong procedure has been followed in respect availing cenvat credit on inputs used in the manufacture of non-excisable goods, which was mis-construed as exempted goods and credit availed, that has led to this infraction, which cannot be equated with a blameworthy con....