2015 (10) TMI 1808 - AT - Central Excise

Recovery of CENVAT Credit - Imposition of penalty - Held that - Show Cause Notice dtd 3.7.2007 was issued proposing demand of Cenvat Credit for the period from October 2003 to May 2004 invoking proviso to Section 11A(1) of the Central Excise Act 1944. Commissioner (Appeals) upheld demand of duty for the extended period of limitation. Then the findings of the Commissioner (Appeals), that the respondent is not part of fraud is contrary and mis-conceived, in so far, as the demand of Cenvat Credit for the extended period would be invalid. But, the Commissioner (Appeals) upheld the demand for the extended period and set aside penalty under Section 11AC, as there was no fault on the part of the appellant, are contradictory and cannot be sustained. - Impugned order set aside - Matter remanded back - Decided in favour of Revenue.

Summary

Issues:
1. Absence of respondent in the hearing due to change of address.
2. Demand of cenvat credit and penalties imposed on the respondent.
3. Reduction of penalty by the Commissioner (Appeal).
4. Upholding of demand for the extended period by the Commissioner (Appeal).
5. Contradictory findings regarding fraud and penalty by the Commissioner (Appeal).

Issue 1: Absence of respondent in the hearing
The judgment notes that the respondent did not appear in the hearing as the notice was returned with the postal remark "Left." Since the respondent did not update their address with the Registry, the appeal was decided in their absence.

Issue 2: Demand of cenvat credit and penalties
The respondents were involved in processing Grey Fabrics, and a show cause notice was issued for demanding cenvat credit of Rs. 18,18,563 along with interest and penalties. The Adjudicating Authority confirmed the demand and imposed penalties on the respondent and the partner. The Commissioner (Appeal) modified the penalty, reducing it for the respondent and setting it aside for the partner.

Issue 3: Reduction of penalty by the Commissioner (Appeal)
The Ld. Authorised Representative for the Revenue argued that the Commissioner (Appeals) did not have the power to set aside the penalty under Section 11AC of the Central Excise Act 1944 as no cross-appeal was filed by the respondents. The Commissioner (Appeals) reduced the penalty based on insufficient evidence and lack of investigations into fraud allegations.

Issue 4: Upholding of demand for the extended period
The Commissioner (Appeals) upheld the demand for the extended period despite finding that the respondent was not part of fraud. This decision was deemed contradictory as it validated the demand but set aside the penalty under Section 11AC.

Issue 5: Contradictory findings regarding fraud and penalty
The judgment concluded by setting aside the Commissioner (Appeals) order against the respondent and remanding the matter for a fresh decision. The appeal by the Revenue was allowed by way of remand, highlighting the contradictory nature of the findings on fraud and penalties.