‘Intentionally’ and ‘Wrongly’ are contrary terms and both cannot be used simultaneously to impose penalty.

PJ/CASE LAW/2014-15/2448

Case:-M/s ANTHEA AROMATICS PVT LTDVs COMMISSIONER OF CENTRAL EXCISE, BELAPUR

Citation:-2014-TIOL-2416-CESTAT-MUM

Brief Facts:- The appellants are in appeal against the impugned order for imposing penalty under Rule 13 of the CENVAT Credit Rules, 2002.The brief facts of the case are that the appellant are manufacturers of excisable goods and are exporting the same. For the goods exported by them, they are entitled to refund claim on the excise duty paid on the finished goods. Instead of claiming the refund, the appellant has taken the credit of the refund attributable to the exports in the RG23A part II (statutory records). On scrutiny, it came to the knowledge of the department that this credit is inadmissible. Therefore, the impugned proceedings were initiated and show-cause notice was issued for denial of the credit. The appellant reversed the credit but contested the penalties imposed on them before tribunal.

Appellant’s Contention:- The ld. counsel for the appellant submits that Ms. Sipra Chakraborty has expired on 19.04.2013, therefore, the penalty on the appellant is not imposable and the appeal of the appellant abates.

Considering the fact that the appellant has passed away on 19.04.2013 and to support this fact, ld. counsel has produced the death certificate on record. Therefore, appeal of Ms. Sipra Chakraborty is disposed of as abated.

The ld. counsel further submits that the show-cause notice has been issued for imposition of penalty on the ground that they have taken credit intentionally and wrongly. The show cause notice has not specifically defined that there was an intention of the appellant to take inadmissible credit. Therefore, the penalty under Rule 13(2) is not imposable but he fairly admitted that the penalty under Rule 13(1) can be imposed for taking inadmissible credit by them. But, he submits that in that case also minimum penalty can be imposed of Rs. 10,000/- and maximum can be up to equal to duty. In this case, penalty has been imposed equal to the duty which is highly excessive as in the facts and circumstances of the case, the appellant has already lost the amount of refund admissible to them on duty paid on exported goods. Therefore, he prayed that leniency be taken while imposing the penalty on the appellant. He further submits that the penalty on Shri Vincent Paul cannot be imposed as per the decision of Ashokkumar H. Fulwadhya vs. UOI 2010 (251) ELT 336 (Bom)under Rule 13 of the Cenvat Credit Rules, 2002.

Respondent’s Contention:-The ld AR reiterates the finding of the impugned order.

Reasoning of Judgement:- Heard both sides and considered the submissions.As per the decision of Ashokkumar H. Fulwadhya (supra), wherein the Hon'ble High Court of Bombay has held that the penalty under Rule 13 ibid can be imposed on the person who is taking credit. In this case, the credit has been taken by M/s. Anthea Aromatics P. Ltd. and not by Shri Vincent Paul. Therefore, following the aforesaid decision, it was held that the penalty on Shri Vincent Paul is not sustainable. Accordingly, the said penalty is set aside.

Coming to the penalty imposed on M/s. Anthea Aromatics P. Ltd. the show-cause notice alleges that assessee has intentionally/wrongly availed credit. When the department is also of the view that credit has taken wrongly then it cannot be held that it has been taken intentionally, as ‘intentionally' and ‘wrongly' are contrary terms. These terms cannot be applied concurrently. Therefore, the conclusion is drawn that the appellant has taken credit wrongly. Therefore, the penalty under Rule 13 (2) ibid cannot be imposed.

Further, it was found that in the impugned order the Commissioner has observed that penalty under Rule 13(1) can be imposed on the appellant but he further observed that the appellant has not been able to make out a case for reduction of penalty. But he failed to discuss why the appellant has not made out a case for reduction of penalty. In this case, the appellant has apparently lost the refund admissible to them. Therefore, the appellant has made out a case for leniency in imposing penalty. Accordingly, the penalty was reduced to Rs. 50,000/-.

With these terms, appeals were disposed of.

Decision:-Appeals disposed off.

Comment:- The crux of the case is that the appeal pertaining to deceased person stands abated. Further, penalty under Rule 13(2) was set aside for the reason that the show cause notice alleged availment of credit wrongly and intentionally by the assessee which is not possible as both the terms are contradictory terms. Accordingly, considering the fact that the credit was availed wrongly, the penalty imposed under Rule 13(2) was dropped. Moreover, as the assessee lost the refund benefit admissible to them by availing credit, lenient approach was taken for imposition of penalty under Rule 13(1) of CCR, 2004.

Prepared by:- Meet Jain

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PJ/CASE LAW/2014-15/2448

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