2012 (3) TMI 449 - HC - Central Excise

Summary

Issues involved:
The issues involved in the judgment are:
a) Imposition of penalty under Rule 13(2) of CENVAT Credit Rules, 2002 read with Section 11AC of the Act for excess credit taken by the assessee by suppression of facts and/or willful misstatement with intent to evade duty.
b) Justification of CESTAT in reducing the penalty imposed on the assessee for willful misstatement and suppression of fact with intent to evade duty.
c) Discrepancy regarding the reversal of credit obtained by the assessee in April 2003.

Imposition of Penalty:
The main issue in this case was whether the assessee could be held liable for imposition of penalty under Rule 13(2) of CENVAT Credit Rules, 2002 read with Section 11AC of the Act for taking excess credit by suppressing facts and/or making willful misstatements to evade duty. The court considered the arguments presented and decided to quash and set aside the impugned order dated 22nd July 2005, restoring the matter to the file of the CESTAT for fresh consideration in accordance with the law. All contentions of both parties were kept open, and the appeal was disposed of with no order as to costs.

Reduction of Penalty by CESTAT:
Another issue raised was whether the CESTAT was justified in reducing the penalty imposed on the assessee for willful misstatement and suppression of facts with intent to evade duty. The court referred to a previous decision and found that the decision relied upon by CESTAT did not apply to the facts of the present case. Consequently, the court quashed the impugned order and directed the matter to be reconsidered by the CESTAT in light of the law, keeping all contentions open.

Discrepancy in Credit Reversal:
The discrepancy regarding the reversal of credit obtained by the assessee in April 2003 was also a point of contention. The court noted that the credit was obtained by the assessee for a specific period but was reversed only upon detection by the department. This discrepancy was considered in the overall decision to quash the previous order and remand the matter for fresh consideration.