Order Date – 24 March 2023

Parties: Shri Pranatharthiharan Sridharan Vs Commissioner of Central Excise & ST, Vadodara-I

Facts –

• The Appellant, Shri Pranatharthiharan Sridharan, is an employee Director in the Company namely M/s. Diamond Power Transformers Limited. Penalty was imposed under Section 15(1) of Cenvat Credit Rules, 2004 on the appellant on the ground that he was overall in-charge and involved in the fraudulent availment of Cenvat credit.

Issue –

• Whether the appellant is liable to pay penalty under section 15(1) of Cenvat Credit Rules, 2004?

Order –

• The Tribunal observed that from the plain reading of Rule 15(1), a person shall be liable to penalty who takes or utilize Cenvat credit in respect of input or capital goods or input services wrongly or in contravention of any of the provisions of these Rules.
• In the facts of the present case, it is M/s. Diamond Power Transformers Limited who has availed fraudulent Cenvat credit, the appellant being employee Director has not availed Cenvat credit for himself therefore, Rule 15(1) is not applicable on the person who has neither availed Cenvat credit nor is the beneficiary of Cenvat credit.
• Accordingly, penalty under Rule 15(1) was wrongly imposed on the appellant. The appeal is allowed.