COMMISSIONER OF CENTRAL EXCISE, SURAT Vs. PRAGATI PROCESSORS

JUDGEMENT

(1.) THIS is an appeal filed by Commissioner, Central Excise & Customs, Surat -I against the Order -in -Appeal No. RKA/813 -814/SRT - 1/2009, dated 24 -11 -2009. M/s. Pragati Processors, Surat were engaged in the manufacture of processed man made fabrics and it was found on scrutiny of cenvat credit account they were availing cenvat credit from 11 manufacturers/suppliers of grey fabrics who did not exist. It was found that the documents were not valid and were fake. On adjudication, the proper authority confirmed the demand of duty amounting to Rs. 2,05,671/ - and imposed mandatory penalty equal to the duty. A personal penalty of Rs. 10,000/ - was imposed on the director. The Revenues case is that the Commissioner (Appeals) has erred in law in modifying the Order -in -Original by reducing the penalty imposed on the assessee under Rule 13(1). It was contended by the Commissioner that looking into the gravity of fraud there was no reason to reduce the penalty less than the central excise duty involved, even if the provisions of Rule 13(1) was to be invoked.

(2.) IT is pertinent to note that the show cause notice demanding recovery of cenvat credit was issued under Rule 12 of Cenvat Credit Rules read with Section 11A of the Central Excise Act. The penalty under Rule 15(1) provides that any person taking cenvat credit in respect of inputs or capital goods wrongly or in contravention of any of the provisions of the rules will be liable to penalty not existing the duty on the excisable goods of which any contravention has been committed or Rs. 10,000/ - (Rs. 2,000/ -) w.e.f. 11 -5 -07 whichever is greater. Therefore the quantum of penalty leviable will be up to the duty on the excisable goods involved or Rs. 10,000/ - or (Rs. 2,000/ -) whichever is greater. I find that as per the Order -in -Original the penalty has been imposed under Rule 13(2) [now Rule 15(2)] of Cenvat Credit Rules, 2004 read with Section 11AC of the Act. Rule 15(2) is para materia with the erstwhile Rule 57 -I(4) of the Modvat Scheme. Even if a harmonious reading of Rule 15(1) and 15(2) of Rules the contention of the respondent that the penalty cannot be less than the excise duty involved will not find any support legally.

(3.) I , therefore, do not find any merits in the appeal filed by Commissioner of Central Excise, Surat -I. I uphold the order of the Commissioner (Appeals).