2017 (4) TMI 937 - AT - Central Excise

Rectification of mistake - appellant have also taken the ground of revenue neutrality, which have not been considered while passing the Final Order by this Tribunal and as such there is a mistake apparent on the record, leading to miscarriage of Justice - Held that - I find that the ground of revenue neutrality was taken which have not been considered, leading to miscarriage of Justice. Accordingly, I modify the Final Order dated 02nd November, 2015 by setting aside the balance tax confirmed ₹ 1,88,364/- approximately, on the invoices No.50 and 51 dated 27/06/2007 and further reduce the penalty to ₹ 36, 201/- under Rule 15 of CCR, 2004 read with section 11 AC of the Act, being the amount already debited vide PLA entry No.13 dated 22/09/2014 - ROM allowed.

Summary

Issues: Rectification of Final Order, Revenue Neutrality, Cenvat Credit Rules, Extended Period, Penalty Modification

Rectification of Final Order:
The applicant filed a miscellaneous application for the rectification of Final Order No.70218/2016 dated 02/11/2015 passed in Appeal No.E/55613/2014. The application was filed within the limitation period. The appellant argued that the ground of revenue neutrality was not considered in the Final Order, leading to a miscarriage of justice. The appellant contended that although there was a technical breach of the Cenvat credit Rules, the situation was revenue neutral as the appellant would have been entitled to take the credit in due course. The Tribunal found merit in this argument and modified the Final Order by setting aside the balance tax confirmed and reducing the penalty amount under the relevant provisions.

Revenue Neutrality and Cenvat Credit Rules:
The appellant had taken Cenvat credit a few days before the receipt of goods in the factory of production, which was a technical breach of the Cenvat credit Rules. However, it was undisputed that the goods were eventually received in the factory. The appellant argued that as there was no loss of revenue and the appellant was entitled to take the credit in due course, the situation was revenue neutral. The appellant requested the Tribunal to modify the demand confirmed in part and the penalty imposed. The Tribunal acknowledged the revenue neutrality aspect and modified the Final Order by setting aside a portion of the tax confirmed and reducing the penalty amount accordingly.

Extended Period and Penalty Modification:
The appellant contended that the issue of show cause notice invoking the extended period was not justified due to the revenue neutrality of the situation. The Tribunal, after considering the arguments from both parties, agreed that the ground of revenue neutrality had not been considered in the Final Order, resulting in a miscarriage of justice. Consequently, the Tribunal modified the Final Order by setting aside a portion of the tax confirmed and reducing the penalty imposed under the relevant provisions. The Tribunal disposed of the miscellaneous application after making the necessary modifications in the Final Order.

Conclusion:
The Tribunal, after hearing the parties and considering the arguments presented, found merit in the appellant's claim of revenue neutrality and rectified the Final Order accordingly. The modifications made by the Tribunal addressed the concerns raised by the appellant regarding the Cenvat credit Rules, extended period, and penalty imposed, ensuring a fair and just outcome in the matter.