NEW PENAL PROVISIONS UNDER CENVAT CREDIT RULES
Amendment w.e.f. 14.05.2015 in Rule 15
Vide
Notification No. 6/2015-ST dated 1.3.2015, following amendments have
been made in Rule 15
containing penal provisions to rationalize
penalties w.e.f. date of enactment of Finance Act, 2015 (14.05.2015)
Under
Penalties Imposable
Rule 15(1)
As per Section 11AC(1) (a) or (b) of Central Excise Act, 1944
or
As per section 76(1) of Finance Act, 1994
Rule 15(2)
As per section 11AC (1) (c) and (d) or (e) of Central Excise Act, 1944
Rule 15(3)
As per section 78(1) of Finance Act, 1994
The
aforementioned penalties shall be over and above interest recoverable
under Rule 14 of Cenvat Credit Rules, 2004. Readers may refer to Topic
No. 25 for penalties under section 76 and 78 of the Finance Act, 1994
Penalties for short / non-payment of duty under Section 11AC of Central Excise Act, 1944
Penal
provisions have been rationalised and the amount of penalties is sought
to be reduced significantly. The amended penalties under section 11AC
under different situations will be as under:
(a) For show cause notices issued after enactment of the Finance Act, 2015 (i.e, 14.05.2015)-
1. For cases not involving fraud, collusion, wilful-misstatement etc. with the intent to evade duty
Amount of maximum penalty shall be limited to the extent of 10% of the duty demanded or ₹ 5,000/-, whichever is higher.
No penalty to be levied if duty and interest is paid with in 30days from the service of show cause notice
Penalty
shall be reduced to 25% of the penalty demanded if duty, interest and
reduced penalty is paid within 30days from the communication of the
adjudication order or the appellate order, as the case may be.
2. For cases involving fraud, collusion, willful-misstatement etc. with the intent to evade duty-
Penalty shall be leviable equivalent to 100% of the duty amount.
Penalty shall be reduced to 15 % if the duty and interest is paid with in 30 days from the service of show cause notice.
Penalty
shall be reduced to 25% of the penalty demanded, if duty, interest and
reduced penalty paid within 30days from the communication of the
adjudication order or the appellate order, as the case may be.
(b)
For the pending SCN’s before adjudication at the time of enactment of
the Finance Act, 2015, i.e. on 14.05.2015 (where the assessee does not
wish to wait for adjudication) -
Cases can be closed
upon the payment of duty, interest and penalty @ 15% of the duty in the
matters involving fraud, collusion, willful-misstatement etc. within
30days from the enactment of the Finance Act, 2015.
Cases can be
closed upon the payment of duty and interest in the matters not
involving fraud, collusion, willful-misstatement etc. within 30days from
the enactment of the Finance Act, 2015.(i.e. from 14.05.2015)
(c) For show cause notices issued before and adjudicated after the enactment of the Finance Act, 2015 (i.e. after 14.05.2015) -
Reduced
penalty of 25% of duty payable shall be applicable in the matters
involving fraud, collusion, willful-misstatement etc. if the duty,
penalty and interest is paid within 30 days from the communication of
the order.
Reduced penalty shall be payable @ 25% of the penalty
imposed in the order for cases not involving fraud, collusion,
willful-misstatement etc. if the duty, penalty and interest is paid
within 30 days from the communication of the order.
Further, for
penalty under section 11A, availability of specified records shall no
more be a criteria for issuing show cause notice to demand reduced
penalty.
Where
only interest is to be demanded and a show cause notice is to be issued
for recovery of interest, relevant date shall be the date of payment of
duty to which such interest relates.