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2012 (5) TMI 12 - HC - Central ExcisePenalty u/s 11AC - Cenvat credit - Transit loss - Order of first appellant authority - Application of mind - held that - in the process of giving brief statement of submission of the appellant, if all the grounds running in several pages are quoted in any order or judgment and that too in a different font, then it may be possible that instruction may have been given to the Steno or any other person to type verbatim the grounds raised in the appeal starting from one point to the last point. It will be appropriate to mention here that in the judgment, if there is reference of previous judgments, then such portion also are required to be quoted, but for the purpose of finding out application of mind upon the ground raised by the appellant, mere quoting of the grounds verbatim and extenso in the order itself cannot be application of mind on the grounds raised by appellant. Such practices are required to be deprecated and the Appellate authority and the Tribunal should be very precise in narrating the facts of the case and the grounds raised by the parties. Reduction of penalty to 25% - held that - So far as benefit of the proviso under section 11AC is concerned, that was available to the appellant as statutory benefit. It may be true that the Division Bench of Delhi High Court issued instruction to the authorities to incorporate the intimation to the assessee of condition of payment within 30 days to take the benefit of waiver of 75% of penalty and interest amount but that is a guideline which cannot be the reason for giving benefit to the person who did not deposit the amount in time knowing the law very well and tried to evade the provisions of law and further to the person who did not deposit such amount before preferring the appeal. The appellant, even before lower appellate authority, did not pray to permit him to deposit 25% of the amount of penalty and interest, therefore, we are not inclined to extend that period available under section 11AC and thus, the appellant is not entitled to such benefit.
Issues:
Imposition of penalty under section 11AC of the Central Excise Act, 1944 for availing illegally CENVAT credit. Consideration of transit loss and mens rea. Applicability of proviso 11AC for penalty waiver. Allegations of lack of application of mind by the authorities in passing the order. Analysis: 1. The appellant contested the penalty imposed under section 11AC of the Central Excise Act, 1944 for availing illegal CENVAT credit. The Assistant Commissioner found the appellant guilty of intentional suppression regarding a shortage of special cement, leading to irregular CENVAT credit amounting to Rs.4,45,860. The appellant argued that the shortage could be attributed to transit loss, constituting only 1.8% of the total received quantity. The appellant emphasized the absence of a finding on mens rea and pointed out the mandatory condition in proviso 11AC for penalty waiver upon timely payment. Reference was made to a Delhi High Court judgment for support. 2. The appellant further contended that the authorities did not apply their minds while passing the order, highlighting discrepancies in the order's formatting and content. The Commissioner's order was criticized for quoting the appellant's appeal in a different font, suggesting a lack of due consideration. Despite these arguments, the Appellate Tribunal upheld the decision, prompting the appellant's plea for reconsideration. 3. The court acknowledged both parties' submissions. The Assessing Officer's detailed assessment revealed the appellant's awareness of the shortage and intentional availing of irregular CENVAT credit. However, concerns were raised regarding the mechanical nature of the order, indicated by discrepancies in formatting and the extensive quoting of appellant's grounds. While the first appellate authority questioned the transit loss claim due to the significant quantity involved, the court found no grounds for interference with the impugned order. 4. Regarding the proviso under section 11AC for penalty waiver, the court emphasized that the benefit was statutory and subject to timely compliance. Despite a Delhi High Court guideline on intimation for payment within 30 days, the appellant failed to deposit the requisite amount in time, precluding entitlement to the waiver benefit. The court, therefore, dismissed the appeal, upholding the penalty imposition under section 11AC of the Central Excise Act, 1944.
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