ORDER

Ashok Jindal, Member (J)

1. Revenue filed this appeal against the order of reducing the penalty from Rs. 55,468/- to Rs. 12,000/-.

2. The brief facts of the case are that the show-cause notice was issued to the respondents as to why CENVAT credit amounting to Rs. 4,78,118/- availed on capital goods not be demanded under proviso to Section 11A(1) of the Central Excise Act, 1944 read with Rule 12 of the Cenvat Credit Rules, 2002 and why the CENVAT credit of Rs. 55,468/-, which was reversed by the respondent prior to issuance of show-cause notice should not be appropriated against the said demand, and why the penalty should not be imposed upon them under Section 11AC of the Central Excise Act, 1944 read with Rule 25 of the Central Excise Rules, 2002 and interest on the Central Excise duty should not be recovered under Section 11AB of the Central Excise Act, 1944. The said show-cause notice was adjudicated whereby a demand to the extent of Rs. 4,22,650/- was dropped on the ground that the machines cleared by the respondent for repairing and reconditioning had been received back within 180 days and demand of Rs. 55,468/- on motor vehicle parts was confirmed under Rule 12 of the Cenvat Credit Rules, 2002 read with Section 11A of Central Excise Act, 1944. The respondent paid the duty confirmed along with interest but the penalty was confirmed on the respondent. On an appeal before the Commissioner (Appeals), the penalty was reduced to Rs. 12,000/-. Aggrieved from the reduction of penalty, the Revenue is before me. The respondent has also filed the cross-objection.

3. Shri P.K. Agarwal, learned SDR appeared on behalf of the Revenue who submitted that it is a case whether the departmental officers have visited the factory premises of the respondent and the discrepancy was detected, which was admitted by the respondents and accordingly, the respondents reversed the CENVAT credit of Rs. 55,468/-. If the Preventive Officers had not visited the factory premises of the respondent, this discrepancy could not have been detected. Hence, the respondents have suppressed the fact. Accordingly, the respondent is liable for mandatory penalty under Section 11AC equal to the duty confirmed. To support his contention, he placed reliance on decision in the case of Commissioner of Central Excise, Nagpur v. Centre Cables Ltd. in Appeal No. E/2280/05 vide Order No. A/731/WZB/MUM/2009/SMB/C-IV dated 17.11.2009, wherein this Tribunal has held that the respondent has availed CENVAT credit without any document and the same was reversed on scrutiny by the department, which amounts to intention to evade the payment of duty and accordingly the penalty was confirmed.

4. On the other hand, Shri N.R. Mainkar, Advocate appeared on behalf of the respondents who submitted that a show-cause notice was issued proposing the demand of Rs. 4,78,118/- on account of removal of capital goods from the factory. In fact, after adjudication the Dy. Commissioner dropped the demand of Rs. 4,22,650/- on the ground that the machines cleared by the respondents for repairing and reconditioning had been received back within 180 days and demand of Rs. 55,468/- was confirmed on some parts, which could not be co-related by the respondents during the course of proceedings. There was no malafide intention of the respondents to evade the payment of duty. In the absence of any malafide intention, the provisions of Section 11AC are not invokable. He further submitted that the Commissioner (Appeals) has reduced the penalty to Rs. 12,000/-, which is justified and legal.

5. Heard both sides.

6. I have gone through the submissions made by both the parties and found that in this case the respondents cleared two machines for repairing and reconditioning along with parts and the same have been received back within 180 days. There is no allegation on the respondents that they are having any malafide intention to evade the duty and the demand proposed in the show-cause notice has been reduced extensively in the adjudication order. Hence, the provisions of Section 11AC are no invokable in this case. The reliance placed by the learned SDR is not applicable to this case as the facts are totally different. In that case, the credit was taken by the party without proper excise document, the same is not in this case.

7. In view of the above observations, the impugned order is sustainable. Accordingly, the same is upheld and the appeal filed by the Revenue is rejected.

(Pronounced in Court)