2013 (5) TMI 291 - AT - Central Excise

Denial of credit - imposition of interest/penalty - rejected and returned goods to the factory for the purpose of re-making and re-conditioning - held that - The order passed by the original authority is proper and reasonable based on the verification report of the Range Officer. However, considering the facts and circumstances of the case, the penalty imposed by the original authority cannot be sustained. Thus, we set aside the order of the Commissioner (Appeals) and uphold the order of the original authority subject to penalty is set aside. The appeal filed by the Revenue is disposed of in the above terms.

Summary

Issues Involved:
Appeal against Order-in-Appeal, denial of credit, penalty imposition, interest confirmation, appeal before Tribunal, denial of credit amount, penalty amount, verification report consideration, correlation of goods and invoices, documentary evidence requirement, adjudication order review, penalty imposition review.

Analysis:

1. Appeal Against Order-in-Appeal:
The Revenue filed an appeal against Order-in-Appeal No. 75/2004 & 76/2004 passed by the Commissioner of Central Excise (Appeals), Chennai. The Commissioner (Appeals) had set aside two Orders-in-Original No. 04/2004 and 06/2004 passed by the Assistant Commissioner of Central Excise, Pondicherry I Division, which led to the current appeal before the Tribunal.

2. Denial of Credit and Penalty Imposition:
The appeal primarily revolved around the denial of credit amounting to Rs.85,027/- along with a penalty of Rs.15,000/- by the Order-in-Original No. 06/2004 dated 25.2.2004. The Tribunal noted that the denial of credit was based on the verification report of the Range Officer, indicating discrepancies in the documentation related to returned goods and invoices.

3. Verification Report Consideration and Correlation of Goods:
The Range Officer's report highlighted that the assessee had taken credit for returned goods based on invoices and credit notes. However, there was a discrepancy of Rs.85,027/- where no documentary evidence existed to prove that the duty amount on those goods had been reimbursed to the buyers. The Commissioner (Appeals) set aside the adjudication order, emphasizing the importance of correlating returned goods with related documents.

4. Adjudication Order Review and Penalty Imposition:
After considering submissions from both sides, the Tribunal found that the original authority's decision to confirm the demand of Rs.85,027/- was reasonable based on the verification report. However, the Tribunal disagreed with the penalty imposition of Rs.15,000/-, deeming it unsustainable. Consequently, the Tribunal set aside the Commissioner (Appeals) order and upheld the original authority's decision, except for the penalty amount, which was revoked.

5. Operative Portion of the Order:
The Tribunal pronounced the operative portion of the order in open court, disposing of the Revenue's appeal in favor of upholding the original authority's decision regarding the denial of credit amount but setting aside the penalty imposition.

This detailed analysis of the judgment highlights the key issues, arguments, and decisions made by the Tribunal in response to the appeal filed by the Revenue.