2013 (7) TMI 905 - HC - Central Excise

Summary

Issues involved: Reduction of penalty by the tribunal without providing reasons and discussion of relevant facts.

The respondent, an assessee, faced a demand of &8377; 9,78,957/- for incorrectly claiming service tax paid on traded goods not used in manufacturing, along with a penalty under Rule 25 of Central Excise Rules, 2002 and Rule 15 of the Cenvat Credit Rules, 2002 read with Section 11AC of the Central Excise Act, 1944. Interest under Section 11AB of the Central Excise Act, 1944 was also directed to be paid. The respondent's appeal was unsuccessful, leading to a second appeal before the Custom Excise and Service Tax Appellate Tribunal.

The tribunal's order dated 24th July, 2011, reduced the penalty to 25% of the duty to be paid within 30 days of receipt of the order, citing the submission that if any duty demand was to be upheld for goods sent for use in earthquake victims' rehabilitation, a harsh penalty should not be imposed. The order did not provide reasons, discuss contentions, issues, or relevant facts, leading the High Court to hold it as not in accordance with the law and lacking natural justice principles.

The High Court framed the substantial question of law regarding the tribunal's order being perverse due to the absence of discussion on relevant facts and reasons for the penalty reduction. With the consent of both parties, the appeal was taken up for hearing and disposal. The court ruled in favor of the appellant, directing the tribunal to hear the appeal again and pass a fresh order with proper reasons. The parties were instructed to appear before the tribunal on a specified date for further proceedings.