Case Law Details
Versatile Wires Limited Vs Commissioner of CGST & CX (CESTAT Kolkata)
The case of Versatile Wires Limited Vs Commissioner of CGST & CX at the CESTAT Kolkata puts forth a significant ruling related to the imposition of penalties u/s 11AC. The court determined that in the absence of clear evidence of fraud, collusion, willful misstatement, or contravention of the provisions of CENVAT Credit Rules, the penalty cannot be applied.
Versatile Wires Limited contended that the alleged suppression of facts, namely a burglary at their factory, was duly reported, and thus the show cause notice issued was barred by the limitation of time. The company took CENVAT credit on copper wire rods which were lost due to the burglary, and later paid the irregular CENVAT Credit back.
The central question of the case was whether a penalty under section 11AC was applicable, which demands evidence of fraud, collusion, willful misstatement, or contravention of the provisions of the Acts and Rules. CESTAT Kolkata ruled in favor of the appellant, stating that no such evidence was present, and therefore, the penalty under Section 11AC could not be sustained.
CESTAT Kolkata’s ruling in the Versatile Wires Limited Vs Commissioner of CGST & CX case reiterates the importance of clear evidence in the imposition of penalties under section 11AC. The ruling reaffirms that penalties can only be applied when there is a direct contravention of the provisions of the Acts and Rules, and not due to unfortunate incidents beyond the company’s control.
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