2010 (4) TMI 775 - HC - Central Excise

Cenvat Credit - Whether the Hon ble Tribunal was justified in holding that credit can be allowed merely on the ground of the invoices of manufacturer if the goods are not manufactured by him - In absence of any finding having been recorded by the Tribunal nor any reasons having been assigned as to why the penalty imposed upon the respondent is required to be set aside it is not possible for this Court to state one way or the other as to whether the Tribunal was justified in setting aside the said penalty - The impugned order of the Tribunal being a non-speaking order insofar as the case of the present respondent is concerned cannot be sustained to that extent.

Summary

Issues:
Challenge to Tribunal's order on CENVAT credit entitlement and penalty imposition.

Analysis:
The High Court considered the challenge to the order dated 24-6-2008 made by the Customs, Excise and Service-tax Appellate Tribunal. Initially, the proposed question by the appellant-revenue was found irrelevant, and permission was granted to re-frame it. The substantial question of law that arose for consideration was whether the Tribunal was justified in setting aside the penalty imposed on the respondent under Rule 26 of the Central Excise Rules, 2002 without recording any findings. The appellant argued that the impugned order was silent on the reasons for setting aside the penalty, while the respondent's advocate contended that the penalty was consequential to the main respondent's case, and hence, separate findings were not necessary.

The High Court observed that the impugned order of the Tribunal lacked reasoning on why the penalty imposed on the respondent was not justified. It emphasized that the Tribunal, being the final authority on facts, must provide adequate reasons for disagreeing with the adjudicating authority's findings. The Court highlighted that without recorded findings or reasons, the Tribunal cannot brush aside the adjudicating authority's reasoning. Since the Tribunal's order was non-speaking regarding the respondent's case, the Court concluded that the Tribunal was not justified in setting aside the penalty without assigning any reasons.

Consequently, the High Court allowed the appeal, setting aside the Tribunal's order to the extent it annulled the penalty imposed on the respondent. The Tax Appeal filed by the respondent was restored to the Tribunal for a fresh decision in accordance with the law, ensuring both parties are given an opportunity to be heard.