No Penalty under CENVAT Credit Rules in Absence Demand of Excise Duty: CESTAT Rules in Favour of Ultra Tech Cement [Read Order]

In the case of Ultra Tech Cements, the Kolkata bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that penalty under CENVAT Credit Rules, 2004 is not imposable when the demand of duty was quashed by the Tribunal.

The Department filed the Appeal on the ground that the penalty under Sub-Rule 1 of Rule 15 of CENVAT Credit Rules, 2004 may be imposed. The respondent-assessee, M/s. Ultra Tech Cement Limited (West Bengal Cement Works) had also filed a Cross Objection against the Department’s Appeal. 

Shri Dipankar Majumdar, Counsel appeared for the Respondent submitted that when the demand itself is not sustainable, the question of imposing a penalty does not arise. He further submitted that the impugned order has erroneously invoked the extended period of limitation under Section 11A(1) of the Excise Act on the ground of wilful suppression and imposed penalty under Rule 15(2) of the CENVAT Credit Rules, 2004.

As per Rule 15(2) in a case, where the CENVAT credit in respect of input or capital goods has been taken or utilized wrongly on account of fraud, wilful misstatement, collusion or suppression of facts, or contravention of any of the provisions of the Excise Act or the rules made thereunder to evade payment of duty, then, the manufacturer shall also be liable to pay penalty in terms of the provisions of Section 11AC of the Excise Act, 1944.

It was evident that a detailed order has been passed by the Bench of the Tribunal in the case of the assessee’s appeal being Excise Appeal NO.70 of 2010 vide Final Order No.75181/2023 dated 29.03.2023 and the Order-in-Original was set aside.

A Coram comprising Shri P.K Choudhary, Member(Judicial) and Shri K Anpazhakan, Member(Technical) observed since the entire Order-in-Original was set aside there is no question of any further penalty to be imposed under Section 15(2) of the CENVAT Credit Rules, 2002.

The Tribunal dismissed the Appeal filed by the Department and the Cross Objection filed by the Respondent also got disposed of.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates