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2015 (1) TMI 802 - HC - Central ExciseReversal of MODVAT Credit - Penalty u/s 11AC - Interest u/s 11AB - Whether the lower appellate authority was right in setting aside the mandatory penalty under Rule 57-I(4) of the Central Excise Rules, 1944 and Section 11AC of the Central Excise Act, 1944 for the entire period subsequent to 28-9-1996 - Held that - Following decision of COMMISSIONER OF CENTRAL EXCISE, CHENNAI Versus EUROTHERM DEL INDIA LTD. 2014 (11) TMI 745 - MADRAS HIGH COURT decision of the Tribunal holding that mandatory penalty is not leviable cannot be accepted and accordingly set aside and the matter is remanded to the Tribunal to reconsider this issue afresh in the light of the decisions referred supra and Notification No.14/96-CE (NT), dated 23.7.1996. Refund Claims Non Speaking Order - order passed by the Tribunal is bereft of reasons and analysis, the same is set aside and the matter is remanded to the Tribunal for passing a reasoned order. - Decided in favour of Revenue.
Issues Involved:
1. Imposition of mandatory penalty. 2. Refund claims and non-speaking order by the Tribunal. Detailed Analysis: 1. Imposition of Mandatory Penalty: 5.1. The primary contention by the department is that the Tribunal erred in setting aside the penalty on the basis that mandatory penalty need not be levied if duty was paid before the issuance of a show cause notice. 5.2. The department supported its argument by referencing Supreme Court decisions in Union of India and others v. Dharamendra Textile Processors and Others, 2008 (231) ELT 3 (SC) and Union of India v. Rajasthan Spinning & Weaving Mills, 2009 (238) ELT 3 (SC), which held that once an order is passed under Section 11A(2) of the Central Excise Act, the invocation of Section 11AC is automatic, leaving no discretion to reduce the penalty. 7.1. The Supreme Court in Dharamendra Textile Processors clarified that the penalty under Section 11AC is mandatory, with no scope for discretion. The relevant portion states: "There is no scope for any discretion. The levy of penalty is a mandatory penalty." 7.3. Similarly, in Rajasthan Spinning & Weaving Mills, the Supreme Court emphasized that once Section 11AC applies, the authority has no discretion in quantifying the penalty, which must be equal to the duty determined under Section 11A(2). 7.4. This view was also upheld by the Madras High Court in Commissioner of Central Excise v. Eurotherm Del India Ltd., 2014 (307) ELT 490 (Mad.), where it was noted that the Tribunal failed to examine the issue of penalty post the introduction of Rule 57-1(4) of the Central Excise Rules, 1944. 7.5. Further, in Commissioner of Central Excise v. Drums and Barrels Madras Pvt. Ltd., 2012 (275) ELT 429 (Mad.), the court reiterated that there is no discretion vested with the authority to reduce the penalty under Rule 57-I, which mandates a penalty equal to the credit availed. 7.6. Consequently, the Tribunal's decision that mandatory penalty is not leviable was set aside, and the matter was remanded to the Tribunal to reconsider the issue in light of the Supreme Court decisions and Notification No.14/96-CE (NT), dated 23.7.1996. 2. Refund Claims and Non-Speaking Order:8. The department contended that the Tribunal dismissed their appeals challenging the partial grant of refund claims by the Deputy Commissioner without providing adequate reasons. 9.1. The Deputy Commissioner had partially rejected the refund claims on 30.6.2000 and 27.7.2000. The assessee and the department both appealed to the Commissioner of Central Excise (Appeals), who allowed the assessee's appeals and dismissed the department's appeals on 28.2.2002 and 1.3.2002. The department then appealed to the Tribunal, which dismissed the appeals with a cursory order. 9.2. The Tribunal's order was found to be lacking in reasons and analysis. Consequently, the High Court set aside the Tribunal's order and remanded the matter back to the Tribunal for a reasoned decision. In conclusion, the appeals were allowed by way of remand to the Tribunal, allowing the assessee to raise all objections on the merits of the department's claim. No costs were awarded.
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