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2018 (6) TMI 577 - AT - Central ExcisePenalty - Section 9 of the CEA 1944 - Held that - The allegation of failure to discharge duty liability by the supplier against the supplementary invoice is still open for a decision as an appeal is pending before the Tribunal - the impugned order is liable to be set aside for the matter to be remanded and the final position of the proceedings initiated against the supplier of the appellant to be ascertained and, after giving an opportunity to the appellant to take a further decision - appeal allowed by way of remand.
Issues:
Proceedings for availment of CENVAT credit against supplementary invoices issued by the supplier without eligibility, confirmation of disallowance, recovery of interest, penalty under section 11AC of Central Excise Act, 1944, setting aside of penalty by the first appellate authority, applicability of Indian Oil Corporation Ltd. case, allegation of suppression of facts, pending appeal before the Tribunal, remand for further decision. Analysis: The case involves M/s Keihin FIE Private Limited facing proceedings for availing CENVAT credit against supplementary invoices issued by their supplier, M/s Fuel Instruments and Engineers Private Limited. The jurisdictional authorities alleged that the credit was availed without eligibility as the supplier discharged the duty liability only after scrutiny and a show cause notice. The original authority disallowed the credit, ordered interest recovery, and imposed a penalty under section 11AC of the Central Excise Act, 1944. The first appellate authority set aside the penalty but confirmed the recovery, leading the assessee to appeal for further relief. The main issue in the appeal was the setting aside of the penalty by the first appellate authority. The Learned Counsel for the assessee referred to various sections of the Central Excise Act, 1944, and CENVAT Credit Rules 2002. They relied on the decision in Indian Oil Corporation Ltd. case, arguing that mere allegation of suppression without adjudication does not warrant denial of CENVAT credit. The Tribunal noted that the allegation against the supplier remained unproved, and approaching the Settlement Commission did not imply admission of fraud or suppression. Therefore, the denial of credit was deemed unsustainable, and the appeal was allowed with consequential relief. Another crucial aspect was the pending appeal before the Tribunal regarding the supplier's failure to discharge duty liability against the supplementary invoice. The Tribunal observed that the lower authority's order lacked merit as the matter was still open for a decision. Citing the precedent, the order was set aside for remand to ascertain the final position of the proceedings against the supplier, allowing the appellant an opportunity to make a further decision. Ultimately, the appeals were disposed of, emphasizing the need for a thorough examination of the supplier's actions and providing clarity on the eligibility for CENVAT credit. The judgment highlighted the importance of proper adjudication and the impact of settlement proceedings on allegations of suppression, ensuring a fair and just resolution in line with the legal provisions.
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