M.Com. Asst. Manager Account
736 Points
Joined April 2012
Rule 15(1) of CCR, 2004:
Rule 15(1) says that if “any person” takes Cenvat Credit on ‘inputs and capital goods' wrongly or in contravention of the provisions of the CCR, 2004, then all such goods are liable for confiscation and such person is liable to a penalty not exceeding the duty on the excisable goods in respect of which any contravention has been committed, or two thousand rupees, whichever is greater.
When the words used are “any person”, it can be construed to mean a manufacturer and even an output service provider. Secondly, the rule covers only a situation where a credit is “TAKEN” but not “UTILIZED”.
So, if a manufacturer or an output service provider “TAKES” the Cenvat Credit on “inputs and capital goods” and which is not proper, he/they are liable for penalty under this sub-rule 15(1) albeit the fact remains that for recovery, the provisions of s.11A or s.73 applies as the case may be.
Rule 15(2) of CCR, 2004:
Rule 15(2) is apparently a sub-set of Rule 15(1) and visualizes a situation where a “Manufacturer” takes or utilizes CENVAT credit fraudulently etc. on ‘inputs and capital goods' and the rule prescribes a penalty in terms of section 11AC of the CEA'44 viz. penalty equivalent to the credit so taken/utilized.
Rule 15(3) of CCR, 2004:
This rule is almost akin to rule 15(1) in the sense it speaks of a situation where “any person” takes CENVAT credit in respect of input services , wrongly or in contravention of any of the provisions of these rules in respect of any input service, then, such person , shall be liable to a penalty which may extend to an amount not exceeding two thousand rupees.
So, if a manufacturer or an output service provider “TAKES” the Cenvat Credit on “input services” and which is not proper, he/they are liable for penalty under this sub-rule 15(3) albeit the fact remains that for recovery, the provisions of s.11A or s.73 applies as the case may be. However, there is a subtle difference between rule 15(1) and 15(3) and which is that the maximum penalty envisaged is only two thousand rupees.
Rule 15(4) of the CCR, 2004 :
This sub-rule is akin to rule 15(2) of the CCR, 2004 except for the fact that it applies exclusively to a “ provider of output service ” and who takes or utilizes CENVAT credit fraudulently etc. on ‘ input services ' except that the rule prescribes a penalty in terms of section 78 of the Finance Act, 1994 viz. penalty which can extend to twice the amount of credit so taken/utilized.
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