Rule 15 – Confiscation and Penalty :
1. Wrongful availment/utilization of CENVAT credit on inputs, capital goods or input services [Sub-rule (1)]: If any person, takes or utilises CENVAT credit in respect of input/capital goods/input services, wrongly or in contravention of any of the provisions of these rules, then:-
(a) all such goods shall be liable to confiscation and,
(b) such person shall be liable to penalty in terms of clause (a) or clause (b) of section 11AC(1) of the Central Excise Act, 1944 or section 76(1) of the Finance Act, 1994 as the case may be.
The quantum of such penalties can be reduced or even nullified depending on the time of payment of excise duty/service tax, interest and reduced penalty, as the case may be, in accordance with clause (a) or clause (b) of section 11AC(1) and section 76(1), as the case may be.
2. Wrongful availment/utilization of CENVAT credit by reason of fraud etc. with the intent to evade the payment of duty [Sub-rule (2)]: Where the CENVAT credit in respect of input/capital goods/input services has been taken or utilised wrongly by reason of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of the Excise Act, or of the rules made thereunder with intent to evade payment of duty then, the manufacturer shall also be liable to pay penalty in terms of the provisions of clause (c), clause (d) or clause (e) of sub-section (1) of section 11AC of the Excise Act.
3. Wrongful availment/utilization of CENVAT credit by reason of fraud etc. with the intent to evade the payment of service tax [Sub-rule (3)]: Where the CENVAT credit in respect of input/capital goods/input services has been taken or utilised wrongly by reason of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of these rules or of the Finance Act or of the rules made thereunder with intent to evade payment of service tax then, the provider of output service shall also be liable to pay penalty in terms of the provisions of sub-section (1) of section 78 of the Finance Act.
4. Principle of natural justice [Sub-rule (4)]: Any order under sub-rule (1), sub-rule (2) or sub-rule (3) shall be issued by the Central Excise Officer following the principles of natural justice.