2019 (11) TMI 560 - HC - Central Excise

Principles of Natural Justice - cross-objection was rejected - reversal of CENVAT credit - electricity weld out to sister concern and also excess power generated and made over to the AVVNL - HELD THAT - This Court is of the opinion that CESTAT correctly noticed the appellant s grievance that it was sought to be penalized in respect of an assumed wrong doing even though according to it the credit had been reversed at the appropriate stage, in respect of an electricity weld out to AVVNL. The Court is of the opinion that the assessee s cross-objections have to be heard afresh and decided on its merits. The impugned order is therefore set aside to that extent and the matter is remitted to the CESTAT which shall issue fresh notice and hear the parties - appeal allwoed by way of remand.

Summary

Issues Involved:
1. Condonation of delay in filing the appeal.
2. Imposition of penalty and reversal of credit for CENVAT claimed for electricity.
3. Dismissal of cross-objection despite specific submission by the appellant.
4. Review of CESTAT order and remittance of the matter for fresh hearing.
5. Direction to the revenue/respondents regarding coercive action during the pendency of cross-objections.

Condonation of Delay:
The High Court, in Application No. 1/2019, condoned the delay in filing the appeal for reasons mentioned in the application, thereby allowing the application.

Imposition of Penalty and Credit Reversal:
The appellant-assessee, engaged in manufacturing Zinc and generating electricity for captive consumption, faced a show cause notice demanding no penalty imposition and no credit reversal for CENVAT claimed for electricity. The appeal before the Tribunal highlighted the appellant's submission regarding the payment of duty through credit reversal for electricity provided to the sister concern. Despite this submission, the cross-objection was dismissed. The Court acknowledged the appellant's grievance and noted that the credit had been reversed at the appropriate stage for electricity supplied to AVVNL. Consequently, the Court set aside the impugned order and remitted the matter to the CESTAT for a fresh hearing.

Dismissal of Cross-objection:
The appellant complained that despite the Tribunal's acknowledgment of its submission in the cross-objection regarding the payment of duty through credit reversal for electricity provided to the sister concern, the cross-objection was dismissed. The Court, after hearing the counsel, agreed that the appellant was being penalized for an assumed wrongdoing, even though the credit had been appropriately reversed. Therefore, the Court directed that the cross-objections be heard afresh and decided on their merits.

Review of CESTAT Order and Remittance for Fresh Hearing:
In light of the circumstances and the appellant's contentions, the High Court set aside the impugned order and remitted the matter to the CESTAT for a fresh hearing. The CESTAT was instructed to issue fresh notices and hear the parties involved to decide the matter on its merits.

Direction Regarding Coercive Action:
The High Court directed the revenue/respondents not to take any coercive action during the pendency of the cross-objections before the CESTAT. This directive aimed to ensure that the appellant was not subjected to any coercive measures while the matter was being re-evaluated by the CESTAT.

Conclusion:
The appeal was partly allowed by the High Court, emphasizing the need for a fresh hearing of the cross-objections and directing the revenue/respondents to refrain from coercive actions during the ongoing proceedings before the CESTAT.