2015 (6) TMI 953 - AT - Central Excise

Penalty u/s 11AC - GTA Service - Held that - ingredient of Section 11AC was not examined by learned Commissioner (Appeals). But it cannot be said so when learned Commissioner (Appeals) in the first round of litigation was aware of the fate of adjudication order and he allowed the appeal of the appellant by his order dated 17.11.2009. To grant relief to the appellant. In this regard, he very rightly appreciated the rationale of the decision in the case of M/s. Maruti Suzuki Vs CCE reported in 2009 (8) TMI 14 - SUPREME COURT . Even ratio of apex court in the case of CCE Vs Gujarat Narmada Fertilizers Co. Ltd. reported in 2009 (8) TMI 15 - SUPREME COURT in the same direction may be appreciated. - Therefore, in absence of any finding showing evasion, imposition of penalty on it shall be unjustified - Decided in favour of assessee.

Summary

Issues: Interpretation of Cenvat law regarding entitlement to Cenvat credit for GTA service used to bring coal for power generation; Imposition of penalty under Section 11AC.

In the judgment delivered by the Appellate Tribunal CESTAT CHENNAI, the issue revolved around the interpretation of the Cenvat law concerning the entitlement to Cenvat credit for GTA service utilized to transport coal for power generation. The appellant argued that despite facing a conflicting situation in understanding the law, they should be entitled to the credit as they acted in good faith. The Tribunal noted that in the first round of litigation, the Revenue did not impose a penalty, and the matter was sent back to the Commissioner (Appeals). However, the Tribunal observed that the Commissioner did not examine the crucial aspect of Section 11AC in the subsequent order. The Tribunal referenced previous judgments, including the case of M/s. Maruti Suzuki Vs CCE and CCE Vs Gujarat Narmada Fertilizers Co. Ltd., to support the decision to grant relief to the appellant. The complexity of the Cenvat credit law, with multiple amendments, was highlighted, making it challenging for a layperson to comprehend. As there was no evidence of evasion, the Tribunal deemed the imposition of a penalty unjustified and consequently allowed the stay application and appeal.

The judgment emphasized the importance of understanding the legal provisions related to Cenvat credit and the necessity for clarity in interpreting such laws. It highlighted the significance of good faith actions by taxpayers and the absence of any findings of evasion as crucial factors in determining the imposition of penalties under Section 11AC. The Tribunal's decision to grant relief to the appellant was based on the principle of fairness and the acknowledgment of the complexities involved in navigating the Cenvat credit law. By referencing previous court judgments, the Tribunal provided a legal basis for its decision and underscored the need for a comprehensive evaluation of the circumstances before imposing penalties. Ultimately, the Tribunal's ruling served as a reminder of the nuanced nature of tax laws and the importance of considering all relevant factors in legal proceedings.