2010 (1) TMI 213 - HC - Central Excise

Cenvat Credit- Whether in the facts and circumstances of the case the CESTAT is right in law in allowing the appeal of the assessee against penalty imposed under Rule 25 of the Central Excise Rules 2002 read with section 11AC of the Central Excise Act after holding that the assessee s contravention of provisions of rule 9(1)(a(iii) of Cenvat Credit Rules 2004 read with rule 11 of the Central Excise Rules 2002 is rectifiable procedural lapse/defects? held that- Tribunal held that the invoices could have been endorsed by the Daman Office of the same appellant in the name of their Mumbai Office. Thus there is no infirmity in the order passed by the Tribunal. It could not give rise to any substantial question of law and hence the appeal is summarily dismissed.

Summary

Issues:
- Appeal against penalty imposed under Rule 25 of the Central Excise Rules, 2002
- Rectifiability of procedural lapse/defects in contravention of Cenvat Credit Rules, 2004

Analysis:
1. The Tax Appeal was filed by the Commissioner, Central Excise, Customs & Service Tax, Vapi, under section 35G of the Central Excise Act, 1944. The substantial question of law for determination was whether the CESTAT was correct in allowing the appeal of the assessee against the penalty imposed under Rule 25 of the Central Excise Rules, 2002, read with section 11AC of the Central Excise Act, considering the rectifiability of the contravention of provisions of rule 9(1)(a(iii) of Cenvat Credit Rules, 2004, read with rule 11 of the Central Excise Rules, 2002.

2. The learned Standing Counsel for the Revenue argued that the penalty imposed on the respondent assessee was justified, as the contravention was not a rectifiable procedural lapse/defect. It was highlighted that there was a statutory violation when the respondent availed credit based on documents issued by a different entity after surrendering its registration certificate. The Revenue contended that the Tribunal erred in deleting the penalty.

3. Upon reviewing the submissions and orders, the Court observed that the Tribunal had correctly interpreted the law. The Tribunal's decision was based on the fact that rule 25 applied only to manufacturers, and previous judgments had addressed the issue of whether a Head Office could issue modvatable invoices for goods imported by a unit. The Tribunal cited relevant cases such as Eupec-Welspun Pipe Coatings India Ltd. v. CCE, Union of India v. Marmagoa Steel Ltd., and CCE v. Myron Electricals (P.) Ltd. The Tribunal concluded that the procedural lapse in endorsing invoices by the Daman Office in the name of the Mumbai Office was rectifiable and should not result in the denial of admissible benefits.

4. The Court agreed with the Tribunal's reasoning, finding no infirmity in its decision. It was held that the rectifiable defect did not raise any substantial question of law, leading to the summary dismissal of the appeal. The Tribunal's decision to set aside the penalty and allow the appeal in favor of the respondent assessee was upheld, emphasizing the importance of rectifiability in procedural lapses without denying entitled benefits.