COMMISSIONER OF C. EX., DAMAN Vs. PRATAP BHANUSHALI

JUDGEMENT

(1.) AN offence case was registered against M/s. Princeware International Pvt. Ltd. for availing Cenvat credit wrongly which culminated in confirmation of duty demand with interest and penalty. The two appellants in this case are Shri Pratap Bhanushali Senior Manager -cum -authorized Signatory and Shri Falgun Shah, Senior President of the company. The appeal filed by the appellant -company was disposed of by this Tribunal vide Order No. A/1571/WZB/AHD/2011 wherein it was held that appellant had taken credit of Rs. 27,203/ - wrongly and the demand of that amount with interest and penalty relatable to that amount was upheld. The present respondents had been imposed penalty by the original adjudicating authority which was set aside by the Commissioner (Appeals) and Revenue is in appeal.

(2.) HEARD both the sides.

(3.) IN this case penalty against the two respondents had been proposed and confirmed under Rule 15(1) of Cenvat Credit Rules, 2004 by the original adjudicating authority. The Commissioner (Appeals) in his order held that Rule 15 can be invoked only against a person who takes or utilizes Cenvat credit wrongly and the Cenvat credit was wrongly taken by the company and not by the two individuals against whom penalty was imposed. However, he also observed that the correct rule to apply in this case would be Rule 26(1) of Central Excise Rules, 2002 which relates to abetment. He took the view that under Rule 26 also no penalty can be imposed since the rule requires that goods should have been held liable to confiscation for imposition of penalty under Rule 26(1). Thus he took the view that penalty under Rule 15 of Cenvat Credit Rules or Rule 26(1) of Central Excise Rules cannot be sustained. In the Revenues appeal it was contended that Rule 26(1) requires that the person concerned should have knowledge or reason to believe that offending goods are liable to confiscation and it is not necessary for adjudicating authority to confiscate certain goods or hold goods liable to confiscation before imposing any penalty on the concerned person. Rule 26 of Central Excise Rules, 2002 reads as under : RULE 26. Penalty for certain offences. - (1) Any person who acquires possession of, or is in any way concerned in transporting, removing, depositing, keeping, concealing, selling or purchasing, or in any other manner deals with, any excisable goods which he knows or has reason to believe are liable to confiscation under the Act or these rules, shall be liable to a penalty not exceeding the duty on such goods or two thousand rupees, whichever is greater. (2) Any person, who issues - (i) an excise duty invoice without delivery of the goods specified therein or abets in mailing such invoice; or (ii) any other document or abets in making such document, on the basis of which the user of said invoice or document is likely to take or has taken any ineligible benefit under the Act or the rules made thereunder like claiming of Cenvat credit under the Cenvat Credit Rules, 2004 or refund, shall be liable to a penalty not exceeding the amount of such benefit or five thousand rupees, whichever is greater.