2012 (7) TMI 831 - AT - Central Excise

Duty equivalent to CENVAT credit u/s 11A - Held that - Where the original authority has dropped show-cause notice proceedings, the appellate authority, acting upon an appeal from the department, should step into the shoes of the adjudicating authority and, in a case of this nature, determine the amount of duty under sub-section (2) of the Section 11A and also determine the quantum of penalty, if found imposable. In the present case, unfortunately, there was no attempt at quantitative determination of duty or penalty. For the present, we have not come across any quantified demand of duty or penalty and hence the assessee virtually stands benefited. There is nothing to be waived, nor is there any basis for directing the appellant to make any pre-deposit - Decided in favour of assessee.

Summary

Issues:
1. Duty equivalent to CENVAT credit availed on inputs demanded by the department under Section 11A of the Central Excise Act.
2. Interest demanded under Section 11AB of the Act.
3. Penalty proposed on the assessee under Rule 15 of the CENVAT Credit Rules, 2004.

Analysis:

Issue 1: Duty Equivalent to CENVAT Credit:
The department issued a show-cause notice demanding duty equivalent to CENVAT credit of Rs. 10,56,734/- availed on inputs. The original authority dropped all proposals, but the appeal to the Commissioner (Appeals) led to a decision in favor of the department. The appellate tribunal noted that the appellate authority should quantitatively determine the duty and penalty in such cases. However, in this instance, there was no quantitative determination of duty or penalty. As a result, the assessee appeared to benefit from the lack of quantified demands. The tribunal ordered a stay of the impugned order, emphasizing the need for a proper determination of duty and penalty.

Issue 2: Interest Demand:
The department also demanded interest under Section 11AB of the Act. While the original authority dropped all proposals, the Commissioner (Appeals) set aside the impugned order and allowed the departmental appeal. However, the appellate tribunal highlighted the failure to quantify the demand for duty or penalty, indicating a lack of basis for directing the appellant to make any pre-deposit. The tribunal ordered a stay of the operation of the impugned order, emphasizing the need for a more thorough and quantified determination in such cases.

Issue 3: Penalty Imposition:
The department proposed a penalty on the assessee under Rule 15 of the CENVAT Credit Rules, 2004. The original authority dropped this proposal, but the Commissioner (Appeals) allowed the departmental appeal. The appellate tribunal observed that in cases where show-cause notice proceedings were dropped by the original authority, the appellate authority should quantitatively determine the duty and penalty. However, in this case, there was no such determination, leading to a situation where the assessee seemed to benefit from the lack of quantified demands. The tribunal ordered a stay of the impugned order, emphasizing the need for a more detailed and quantitative approach in determining duty and penalty amounts.

In conclusion, the appellate tribunal highlighted the importance of a quantitative determination of duty and penalty in cases where show-cause notice proceedings have been dropped by the original authority. The lack of quantification in the present case led to a stay of the impugned order, emphasizing the need for a more thorough and accurate assessment in such matters.