By Puloma Dalal, Jayesh Gogri, Mandar Telang Chartered Accountants
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In absence of specific allegation in the SCN for levy of penalty for a specific purpose, no penalty can be levied.
Facts:
The
appellant had one manufacturing unit (Unit-I) and one service providing
unit (Unit-II). During the period from April 2007 to April 2008, Unit-I
took the CENVAT credit on certain input services though it was not
eligible to do so. This credit was, in fact, meant for Unit-II. The
irregular availment of CENVAT credit by Unit-I was noticed by the
department in October 2008, whereupon the credit was reversed forthwith
on 16-10-2008. For this, a Show Cause Notice was issued in April 2009.
The Appellant paid interest in February 2010. In the Show Cause Notice, a
penalty of Rs. 2,000/- was imposed under Rule 15(3) of the CCR, which
was also paid by the Appellant.
Subsequently, order was reviewed
by the department for non-imposition of penalty under sub-rule (4) of
Rule 15 of the CCR, 2004 read with section 78 of the Finance Act, 1994
and accordingly an appeal was filed with the Commissioner (Appeals) who
allowed the same and imposed penalty under 15(4) of CCR.
This
higher penalty was challenged by the Appellant contending that, no
ground for imposing penalty under Rule 15(4) was alleged in the Show
Cause Notice.
The department contended that, such penalty could
not be resisted by the appellant by mere reason of non-mentioning of
sub-rule (4) of Rule 15 or of section 78 of the Finance Act, 1994 in the
Show Cause Notice. Further, the wrong mentioning of section 11AC of the
Central Excise Act is also not fatal to the Revenue. It was further
contended that the demand confirmed against the appellant by the
original authority by invoking the extended period of limitation was not
challenged by it, it was precluded from resisting penalty under Rule
15(4) read with section 78.
Held:
It was held that
Para 5 of the Show Cause Notice contained an allegation to the effect
that the appellant contravened certain rules with intention to evade
payment of duty, but such allegation was made for the specific purpose
of invoking the extended period and not for imposing a penalty under
Rule 15(4). It further observed that irregular availment of the CENVAT
credit as alleged for invoking Rule 15(3) and not for invoking Rule
15(4) and that though the Show Cause Notices invoked Rule 15 of the
CENVAT Credit Rules, 2004, any sub-rule was not specified therein. The
Tribunal held that, since the different sub-rules of Rule 15 covered
different factual situations and, it was incumbent on the department to
specify the particular sub-rule which they wanted to invoke in a
particular Show Cause Notice. Relying upon Amrit Foods vs. CCE 2005
(190) ELT 433 (SC), the penalty under Rule 15(4) was set aside.
