2017 (11) TMI 931 - HC - Central Excise

Extended period of limitation - adjudication pending - Whether in the facts and circumstances of the case and law, the Hon ble Tribunal has committed substantial error of law in holding that the extended period of imitation could not have been invoked by the Department and the same on merits is in favor of the Respondent-Assessee? Held that - It is reported that the proceedings before the adjudicating authority on remand are still pending. Under the circumstances, the learned Tribunal ought not to have dismissed the appeal preferred by the revenue which was preferred to enhance the amount of penalty - the proceedings before the adjudicating authority in so far as the respondent assessee are concerned, are pending pursuant to the order passed by the learned tribunal dated 24-1-2011. Therefore, the outcome of the said proceedings would have a direct bearing on the issue with respect to penalty. The impugned order passed by the learned tribunal cannot be sustained and the same deserves to be quashed and set aside and the matter is required to be remanded to the adjudicating authority to consider the issue with respect to penalty to be considered along with adjudication proceedings, which are pending before the adjudicating authority - appeal allowed by way of remand.

Summary

Issues:
1. Whether the extended period of limitation could have been invoked by the Department?
2. Whether the impugned order passed by the Tribunal was in accordance with the law and evidence?

Analysis:

Issue 1:
The appeal was filed by the revenue against the impugned order passed by the Tribunal, which dismissed the appeal preferred by the revenue to enhance the penalty amount. The Tribunal based its decision on the judgment in a similar case where the extended period of limitation was set aside. However, it was noted that the respondent assessee did not challenge the Tribunal's order remanding the matter to the adjudicating authority for fresh adjudication. As the proceedings before the adjudicating authority were still pending, the Tribunal should not have dismissed the appeal based on the merits of the demand of Cenvat credit. The High Court held that the Tribunal erred in dismissing the appeal without considering the pending proceedings and remanded the matter back to the adjudicating authority for a comprehensive review, including the issue of penalty.

Issue 2:
The High Court found that the impugned order passed by the Tribunal was not sustainable due to the pending adjudication proceedings concerning the respondent assessee. The Court quashed and set aside the Tribunal's order and remitted the matter to the adjudicating authority for a holistic consideration of the penalty issue along with the ongoing adjudication proceedings. The Court partially allowed the appeal, emphasizing the need for a comprehensive review of the penalty issue in conjunction with the pending adjudication process. No costs were awarded in the matter.

In conclusion, the High Court's judgment addressed the issues raised by the revenue regarding the invocation of the extended period of limitation and the adequacy of the Tribunal's order. The Court emphasized the importance of considering the pending adjudication proceedings in determining the penalty amount, leading to the partial success of the appeal and the remand of the matter to the adjudicating authority for further review.