2018 (11) TMI 1140 - AT - Central Excise

Penalty - CENVAT Credit - alleged disproportionate in respect of the inputs physically found to be short of book balance - demand alongwith interest and penalty - Held that - The judgment/Order of this Bench for the earlier period in the appellant s own case INDIAN ADDITIVES LTD. VERSUS COMMISSIONER CENTRAL EXCISE, CHENNAI 2018 (8) TMI 1576 - CESTAT CHENNAI has held that Since the issue being an interpretational one and the appellants having litigated the same upto the Hon ble High Court, penalty not sustainable and is set aside. . As could be seen from the records, the Order-in-Original was passed on 26.07.2006 and the Order-in-Appeal came to be passed on 09.10.2017 whereas, the Hon ble jurisdictional High Court passed its Order on 23.01.2018. Hence, a reasonable view could be adopted at least for this year/period, to hold that the matter which involved interpretational issue came to be settled after passing of the Order-in-Appeal which is impugned herein and that could be a ground to hold that there was no mala fide intention of evading duty by the appellant. The demand raised against the appellant and the consequential interest levied by the adjudicating authority requires no interference - penalty set aside - appeal allowed in part.

Summary

Issues:
Appeal against Orders of Commissioner of G.S.T. & Central Excise (Appeals-II) upholding demand, interest, and penalty.

Analysis:
The appellant, a manufacturer of lubricating oil additives, availed CENVAT Credit on inputs under CENVAT Credit Rules, 2004. A Show Cause Notice was issued proposing a demand due to alleged discrepancies in inputs. The Order-in-Original confirmed the demand, leading to an appeal before the Commissioner of G.S.T. & Central Excise (Appeals-I), who upheld the findings. The appellant's advocate argued that a similar issue was decided against the appellant by the High Court previously, and hence, the penalty should be set aside.

The Department Representative supported the lower authorities' findings, citing a previous order of CESTAT upholding a disallowance for the appellant. He argued that the appellant should have paid the duty and interest promptly, and the penalty was justified due to the lack of proof of bona fides. The DR emphasized that a penalty deleted in an earlier year should not impact subsequent periods.

The Tribunal considered both arguments, noting the timing of relevant orders and judgments. Despite finding the DR's contentions well-founded, the Tribunal observed that the interpretational issue was settled only after the Order-in-Appeal under consideration. Consequently, the Tribunal held that there was no mala fide intention to evade duty by the appellant, leading to the setting aside of the penalty.

Ultimately, the Tribunal allowed the appeals partially, setting aside the penalty while upholding the demand and interest levied by the adjudicating authority. The judgment was pronounced in open court on 26.09.2018.