2011 (8) TMI 592 - HC - Central Excise

Waiver of Pre deposit - Question of law raised penalty is imposable upon the Appellant under Rule 13 of Cenvat Credit Rules, 2002 when the Appellant had never availed of Cenvat Credit? - issue of invoices by the Appellant also implies taking of cenvat credit? - Held That - Tribunal proceeded on the erroneous basis in paragraph 5 of its order that the Appellant had not disputed having issued invoices passing a huge Cenvat credit amounting to Rs.4.05 Crores. This factual basis with respect and prima facie appears to be erroneous. Case remitted back to tribunal for a fresh decision on the application for waiver of predeposit.

Summary

Issues:
1. Application for waiver of predeposit under Section 35F of the Central Excise Act 1944.
2. Imposition of penalty under Rule 26(2) of the Central Excise Rules 2002.
3. Contention regarding the applicability of Rule 13 of Cenvat Credit Rules, 2002.
4. Validity of the order of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT).
5. Dispute over the issuance of invoices and availing of Cenvat credit.

Analysis:
1. The appeal arose from an order of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) concerning the waiver of predeposit under Section 35F of the Central Excise Act 1944. The Assistant Commissioner imposed a penalty under Rule 26(2) of the Central Excise Rules, which was upheld by the Commissioner (Appeals). The Appellant contended that the penalty was imposed under the wrong provision, as Rule 26(2) came into effect after the violation period. The Tribunal directed the Appellant to deposit a specific amount and raised substantial questions of law regarding the imposition of penalties under different rules.

2. The Tribunal's decision was challenged on various grounds, including the applicability of Rule 13 of the Cenvat Credit Rules, 2002, the issuance of invoices, and the imposition of predeposit based on the wrong provision of law. The Appellant argued that the Tribunal erred in assuming the Appellant had issued invoices for availing Cenvat credit, contrary to the Appellant's submission denying such issuance. The Court found factual errors in the Tribunal's order and decided to set aside the decision, remitting the case back to the Tribunal for a fresh consideration on the application for waiver of predeposit.

3. The Court noted discrepancies in the Tribunal's findings regarding the issuance of invoices and the availing of Cenvat credit. The Tribunal's reliance on a factual premise that the Appellant had not disputed issuing invoices was deemed erroneous. As a result, the Court refrained from delving into broader legal questions raised in the appeal and decided to overturn the Tribunal's order, allowing all rights and contentions to be reexamined by the Tribunal. The appeal was disposed of without costs.

Conclusion:
The High Court Bombay High Court, in its judgment, addressed the issues surrounding the imposition of penalties under different rules, the applicability of Cenvat Credit Rules, and the dispute over the issuance of invoices for availing Cenvat credit. Finding factual errors in the Tribunal's order, the Court set aside the decision and remitted the case for a fresh consideration, refraining from making any definitive findings on the legal questions raised. The judgment emphasized the importance of factual accuracy in legal proceedings and upheld the Appellant's right to a fair reconsideration of the waiver of predeposit application by the Tribunal.