2010 (3) TMI 313 - HC - Central Excise

Unreasoned order- penalty- Tribunal affirmed the order of Commissioner (Appeals) reducing penalty while it was pointed out that issue regarding power to impose or reduce penalty pending before Apex Court judgment now holding field on issue. Tribunal without dealing with rival contentions passed unreasoned order. Submission of assessee that factual matrix to be examined and facts investigated or decide whether Section 11AC

Summary

Issues:
Appeal against order of Customs, Excise & Service Tax Appellate Tribunal regarding Section 11(A) r/w Rule 173(Q) of Central Excise Rules, 1944. Tribunal affirmed duty imposition but reduced penalty. Interpretation of judgments by the Apex Court - Union of India v. Dharamendra Textile Processors and Union of India v. Rajasthan Spinning & Weaving Mills. Lack of reasoning in Tribunal's order necessitating remand for fresh consideration.

Analysis:
The High Court reviewed an appeal challenging the Customs, Excise & Service Tax Appellate Tribunal's decision related to Section 11(A) in conjunction with Rule 173(Q) of the Central Excise Rules, 1944. The Tribunal upheld the imposition of duty while reducing the penalty, prompting the appeal. The counsel for the Appellant pointed out the pendency of a crucial issue before the Apex Court regarding the authority to impose or decrease penalties. Reference was made to two significant judgments of the Apex Court, namely Union of India v. Dharamendra Textile Processors and Union of India v. Rajasthan Spinning & Weaving Mills, to support their argument.

The Respondent's counsel contended that a detailed examination of the factual background was necessary to determine the applicability of Section 11AC of the Central Excise Act, 1944. They advocated for the matter to be remanded back to the Tribunal for a thorough review since the Tribunal's order lacked a reasoned analysis of the parties' arguments. Upon scrutinizing the Tribunal's order, the High Court found it to be inadequately reasoned and devoid of a comprehensive discussion on the opposing contentions, leading to the decision to quash the order and remand the case back to the Tribunal for a fresh consideration.

Consequently, the High Court set aside the Tribunal's order and directed the Tribunal to reexamine the appeal, taking into account the arguments of both parties in a reasoned order that adheres to the principles of natural justice. The Tribunal was instructed to expedite the process and provide a decision within six months from the date of the High Court's order. The High Court emphasized that all arguments on merits remain open for consideration, and the appeal was disposed of without any costs being awarded.