2022 (9) TMI 1541 - AT - Central Excise

Rectification of mistake - imposition of 100% penalty under section 11AC readwith Rule 25 of Central Excise Rules, 2002 - extended period of limitation - HELD THAT - Section 11AC prescribed a mandatory penalty for non-levy or short levy or non-payment or short payment or erroneous refund of duty by reason of fraud or collusion or any willful statement or suppression of facts or contravention of any provision of the Act or the Rules made thereunder with an intent to evade payment of duty. These are the same elements which are required to confirm duty invoking the extended period of limitation - the demand of duty upheld by invoking extended period of limitation in the final order and, therefore, penalty under section 11AC invariably follows and there is no discretion in the matter - there is no mistake in not giving a separate finding on the penalty under section 11AC. Computation by adjusting the cenvat credit available on inputs used was not considered - HELD THAT - There are no provision in the Act or Rules by which the duty can be determined after deducting the cenvat credit which may be available on the inputs as claimed by the assessee. Of course, if duty is payable, the assessee will be entitled to cenvat credit as per the Cenvat Credit Rules and may also able to use the cenvat credit to pay the duty. This, first, of course, will be subject to verification of the availability of cenvat credit as per the rules. Thus, instead of reproducing the findings of the Adjudicating Authority, the final order of the Tribunal has endorsed his findings. Therefore, the assertion in the application by the Revenue that the Tribunal has set aside any demand in the concluding paragraph of the final order is factually incorrect and misconceived. Application disposed off.

Summary

Issues:
Rectification of mistake in final order regarding imposition of penalty under section 11AC and computation of duty by adjusting cenvat credit for the assessee. Alleged error in setting aside demand without considering facts for the Revenue.

Analysis:
1. The judgment involves two rectification applications, one by the assessee and the other by the Revenue, seeking corrections in the final order dated 14.07.2020, which dismissed both the assessee's appeal and the Revenue's appeal.
2. The assessee's application sought rectification on two points: firstly, contesting the imposition of 100% penalty under section 11AC and Rule 25 of the Central Excise Rules, and secondly, requesting consideration of computing duty by adjusting cenvat credit available on inputs used in manufacturing Iron and Steel parts.
3. Regarding the penalty under section 11AC, the Tribunal found that since the demand of duty invoking an extended period of limitation was upheld in the final order, the penalty under section 11AC automatically follows without the need for a separate finding, as the elements required for confirming duty and imposing penalty are the same.
4. The second alleged mistake by the assessee related to the computation of duty by adjusting cenvat credit on inputs. The Tribunal clarified that there is no provision allowing duty to be determined after deducting cenvat credit. However, if duty is payable, the assessee can avail cenvat credit as per the rules and use it to pay the duty, subject to verification.
5. The Revenue's application pointed out an error in the final order where it was claimed that the Tribunal set aside a demand without considering relevant facts. The Tribunal refuted this claim, stating that the concluding paragraphs of the final order did not set aside any demand confirmed by the lower authority. Instead, the Tribunal endorsed the findings of the Adjudicating Authority, as the Department failed to provide concrete evidence to contradict those findings.
6. Consequently, the Revenue's application was rejected, while the assessee's application was partly allowed. A sentence was inserted in the final order to clarify that if the assessee is entitled to cenvat credit on inputs used in manufacturing final products, it shall be admissible subject to verification by the officers.
7. Both applications were disposed of, with the order pronounced in open court on 30/09/2022.