2011 (3) TMI 1572 - AT - Central Excise

Summary

Issues Involved:
Whether liability under Notification No. 6/2000-C.E. was correctly calculated and reduced by the Commissioner (Appeals)? Whether interest liability can be set aside by the Commissioner (Appeals) and if the penalty under Rule 173Q was rightly imposed?

Analysis:

Issue 1: Liability Calculation under Notification No. 6/2000-C.E.
The issue revolved around whether the respondents complied with the conditions of Notification No. 6/2000-C.E. The Tribunal noted that the Commissioner (Appeals) reduced the liability from Rs. 3,56,082 to Rs. 3,22,731 based on the calculations provided by the respondents. The adjudicating authority's confirmation of liability was solely based on the Superintendent's calculations without proper analysis or verification. The Tribunal found that the adjudicating authority failed to assess the method and basis of calculations or provide supporting documentation to the respondents. Consequently, the reduction of liability to Rs. 3,22,731 was deemed appropriate due to the lack of proper analysis and disclosure of calculation methodology.

Issue 2: Setting Aside of Interest Liability
The Commissioner (Appeals) set aside the interest liability, which was deemed a statutory obligation of the assessee. The Tribunal held that the setting aside of interest liability was incorrect as it is a statutory liability and cannot be waived. Therefore, the decision to set aside interest liability was overturned, and the original liability was reinstated.

Issue 3: Imposition of Penalty under Rule 173Q
The Commissioner (Appeals) concluded that there was no mala fide intention on the part of the respondents, hence no penalty was warranted. However, the Tribunal disagreed, stating that Rule 173Q applies to both wrong availment and utilization of credit, including retention of credit against the law. The Tribunal found the Commissioner (Appeals) erred in not analyzing the imposition of penalty under Rule 173Q properly. Therefore, the decision to set aside the penalty was deemed incorrect, and the original penalty imposed by the adjudicating authority was reinstated.

Conclusion:
The appeal partially succeeded, affirming the reduction of liability to Rs. 3,22,731 but overturning the setting aside of interest liability and penalty imposition. The impugned order was confirmed regarding the liability reduction but set aside concerning interest and penalty, restoring the adjudicating authority's decision on penalty imposition.