2011 (1) TMI 59 - AT - Central Excise

Demand of duty Cenvat credit - denial of CENVAT credit in respect of the inputs used in the manufacture of the goods subject to production of relevant invoices etc. to the satisfaction of the authorities - lower appellate authority s order is modified and the matter is remanded to the original authority to re-quantify the duty amount after considering the claim of CENVAT credit as allowed by the lower appellate authority, against which no appeal has been filed by the Department and thereafter to re-determine the penalty amount - it is open to the appellants to plead before the original authority that in respect of duty paid by them on their own calculation no penalty imposable in view of the provisions of Section 11A (2B) Appeal allowed by way of remand

Summary

Issues: Duty demand confirmation, penalty imposition, denial of CENVAT credit, remand for re-quantification of duty amount and penalty determination.

Duty Demand Confirmation:
The original authority confirmed a duty demand of Rs.3,90,796 against the appellants and appropriated Rs.1,45,448 paid by them earlier. Additionally, a penalty of Rs.3,90,796 was imposed along with interest. The lower appellate authority upheld the penalty but set aside the denial of CENVAT credit for inputs used in manufacturing the goods, subject to producing relevant invoices to the authorities' satisfaction. However, the lower appellate authority did not specifically remand the matter to the original authority or direct re-quantification of the duty amount, which is essential following the CENVAT credit allowance. The absence of re-quantification makes confirming the penalty equal to the total duty amount unjustified.

Penalty Imposition:
The lower appellate authority's order was modified, and the case was remanded to the original authority to re-quantify the duty amount after considering the allowed CENVAT credit. The original authority was instructed to then re-determine the penalty amount. During this process, the appellants should be given a fair hearing opportunity. The appellants can argue before the original authority that no penalty should be imposed based on their own duty calculation under Section 11A (2B). The appeal was allowed for remand under these terms.

Denial of CENVAT Credit:
The lower appellate authority set aside the denial of CENVAT credit for inputs used in manufacturing the goods, provided the relevant invoices are presented to the satisfaction of the authorities. This decision was a crucial aspect of the judgment, as it impacted the duty demand confirmation and penalty determination.

Remand for Re-Quantification of Duty Amount and Penalty Determination:
The lower appellate authority's failure to direct re-quantification of the duty amount after allowing CENVAT credit necessitated the remand to the original authority. The duty amount needed to be re-calculated considering the CENVAT credit, followed by a reassessment of the penalty amount. This remand was crucial to ensure a fair and accurate determination of the duty and penalty amounts in light of the CENVAT credit allowance.