2017 (12) TMI 332 - HC - Central Excise

Penalty - Section 11A of the CEA 1944 - Held that - when action of the assessee cannot be said to be mala fide or that there is no finding of fact of the assessee having perpetuated fraud collusion or having made willful mis-statement or suppression of facts the Assessing Officer could not have exercised his power u/s 11A within the extended period of limitation so provided in terms of the proviso contained therein - appeal dismissed - decided against appellant.

Summary

Issues:
1. Initiation of proceedings under CENVAT Credit Rules, 2004 for wrongly availed credits.
2. Imposition of penalty under Section 11A of the Central Excise Act, 1944.
3. Quashing of revenue's action by the Customs, Excise and Service Tax Appellate Tribunal.
4. Non-application of mind, absence of reasons, and confusion regarding the admissibility of credit.
5. Exercise of power under Section 11A within the extended period of limitation.
6. Precedent set by the Supreme Court in Uniworth Textiles Limited case.

Analysis:
1. The revenue initiated proceedings against the assessee for wrongly availed credits under the CENVAT Credit Rules, 2004, leading to the imposition of a penalty of &8377; 38,51,598 by the Assessing Officer, which was affirmed by the Commissioner (Appeals).

2. The Customs, Excise and Service Tax Appellate Tribunal quashed the revenue's actions and orders, citing reasons such as non-application of mind, absence of reasons for initiation beyond the limitation period, and ambiguity regarding the credit's admissibility.

3. The Tribunal's findings highlighted that the Assessing Officer could not exercise power under Section 11A beyond the prescribed limitation period, especially when there was no evidence of mala fide actions, fraud, collusion, or willful misstatement by the assessee.

4. Referring to the Uniworth Textiles Limited case, the High Court emphasized the importance of bona fide conduct by the appellant in addressing doubts and seeking clarification from relevant authorities before claiming exemptions. The Court found no substantial question of law for consideration and dismissed the appeal, upholding the Tribunal's order.

5. The judgment reaffirmed the settled legal position and precedent established by the Supreme Court, emphasizing the significance of bona fide conduct and adherence to the law in matters concerning tax credits and exemptions. The High Court's decision was based on the principles of lawfulness and procedural fairness, ultimately leading to the dismissal of the appeal.