2018 (1) TMI 641 - HC - Central Excise

CENVAT/MODVAT credit - penalty - Held that - the order directing levy of penalty of ₹ 35,000/- under Rule 571(4) of the Central Excise Rules, is set aside and the matter is remanded to the third respondent for arriving at a correct value, as it is contended that cum-duty price ought to have been taken into consideration - appeal allowed by way of remand.

Summary

Issues:
Challenge to tribunal's order on duty demand and penalty reduction.

Analysis:
The petitioner filed a writ petition challenging the tribunal's order dated 12.03.2004, which upheld a duty demand of ?2,74,292 and reduced penalty of ?2,00,000 imposed by the second respondent. The tribunal allowed the appeal regarding the denial of Modvat Credit, setting aside such findings. However, it only granted partial relief on the penalty, reducing it to ?35,000. The court noted that when the main issue of Modvat credit denial was set aside, the penalty should have been entirely set aside as well. The court found the tribunal's decision on penalty reduction to be incorrect and interfered with the order accordingly.

The petitioner argued that as per decisions of the Supreme Court, the value should have been taken as cum-duty price, requiring a reworking of the duty amount. This argument was raised in the grounds of appeal before the tribunal, but no specific finding was given on this issue. The court observed that this was a settled legal issue based on Supreme Court decisions, and the value should be re-determined accordingly by the third respondent. The court allowed the writ petition, setting aside the penalty of ?35,000 and remanding the matter to the third respondent for correct valuation based on the cum-duty price consideration.

In conclusion, the court allowed the writ petition, setting aside the penalty imposed under Rule 571(4) of the Central Excise Rules and remanding the matter for revaluation based on the cum-duty price. No costs were awarded, and the connected miscellaneous petition was closed.