Custom, Excise & Service Tax Tribunal
M/S. Tuticorin Alkali Chemicals & ... vs Cce, Tirunelveli on 5 March, 2018
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, CHENNAI
Appeal No.E/61/2010
(Arising out of Order-in-Appeal No. 346/2009 dated 27.10.2009 passed by the Commissioner of Central Excise (Appeals), Madurai)
M/s. Tuticorin Alkali Chemicals & Fertilizers Ltd. Appellant
Vs.
CCE, Tirunelveli Respondent
Appearance Ms. S.Vishnu Priya, Advocate for the Appellant Shri Rr. Subramanian, AC (AR) for the Respondent CORAM Honble Ms. Sulekha Beevi C.S., Member (Judicial) Honble Shri Madhu Mohan Damodhar, Member (Technical) Date of Hearing / Decision: 05.03.2018 Final Order No. 40561 / 2018 Per Bench Brief facts are that the appellants are engaged in manufacture of various chemicals and fertilizers and are registered with the Central Excise Department. They cleared waste and scrap of inputs and capital goods during the period from 1.8.2002 to 31.12.2006. A show cause notice was issued to the appellant proposing demand of duty by invoking provisions under Rule 3(5A) of CENVAT Credit Rules, 2004 alleging non-reversal of credit when such inputs and capital goods are removed. After due process of law, the original authority confirmed the demand of Rs.8,97,779/- along with interest and also imposed equal penalty under section 11AC of the Act as well as equal penalty under Rule 15 of CENVAT Credit Rules, 2004. In appeal, Commissioner (Appeals) set aside the demand of duty on capital goods/inputs for the period prior to 16.5.2005 on the ground that Rule 3(5A) had come into force only with effect from 16.5.2005. The penalty imposed under section 11AC was dropped, however, penalty imposed under Rule 15 was sustained. Aggrieved, the appellant is now before the Tribunal.
2. On behalf of the appellant, ld. counsel Ms. S. Vishnu Priya submitted that the appellant is not challenging the demand of duty for the period from 16.5.2005 to 31.12.2006 but is confining the challenge only on the penalty imposed. She argued that the Commissioner (Appeals) has rightly set aside the penalty under section 11AC of the Central Excise Act. The department has not been able to establish any fraud, suppression of facts on the part of the appellant. When the Commissioner (Appeals) has set aside the penalty imposed under Section 11AC of the Central Excise Act, the penalty imposed under Rule 15 cannot sustain for the reason that the said penalty is subject to Section 11AC of the Act.
3. The ld. AR Shri R. Subramanian has reiterated the findings in the impugned order.
4. Heard both sides.
5. On perusal of records, we find that the demand has been raised for violation of Rule 3(5A) of CENVAT Credit Rules, 2004. The allegation is that the appellant removed the used inputs and capital goods and did not reverse the proportionate duty upon such items. Though there is a vague allegation in the show cause notice that the appellant suppressed facts, nothing is brought out from the records to support this allegation. In fact, the ld. counsel has argued that the entire demand has been raised from the invoices / documents furnished by the appellant to the department. There being no suppression brought out from the facts with intent to evade payment of duty, we are of the view that the Commissioner (Appeals) has rightly set aside the penalty imposed under section 11AC of Central Excise Act. In view thereof, penalty imposed under Rule 15 of CENVAT Credit Rules, 2004 requires to be set aside, which we hereby do. The impugned order is modified to the extent of setting aside the penalty imposed under Rule 15 of CENVAT Credit Rules, 2004 without disturbing the duty demand and interest thereon. The appeal is partly allowed with consequential relief, if any.
(Operative portion of the order was
pronounced in open court)
(Madhu Mohan Damodhar) (Sulekha Beevi C.S.)
Member (Technical) Member (Judicial)
Rex
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