2017 (5) TMI 1447 - AT - Central Excise

Penalty u/r 26 - Manufacture - N/N. 11/2006-CE (NT) dated 29/05/2006 - The Revenue is aggrieved that in spite of the main respondent fulfilling the condition by paying full duty liability with interest alongwith 25% penalty the penal proceedings under Rule 26 cannot be closed - Held that - it cannot be construed that impugned notice had not been issued to the respondent under Sub-Section (1) of Section 11 A of the Act ibid. Accordingly the proposal for penalty u/r 26 ibid. initiated in the impugned notice against the respondents has correctly been concluded by the adjudicating authority consequent to deposit of entire duty interest and penalty of 25% of the duty involved by M/s Sachdeva Auto Centre in terms of first proviso to Sub-Section (2) of the Section 11 A ibid - there is nothing in the present appeals by the revenue to controvert the above findings. Regarding the plea of the respondent regarding entitlement of credit of duty already paid I find that the cross appeal can agitate only matters which were decided in the impugned order. While cross appeal can be considered as an appeal for all purposes even such appeal can only raise points which were subject matter of decision of impugned order - the cross appeals are liable to be rejected. Appeal rejected - decided against Revenue.

Summary

Issues:
1. Liability of Central Excise duty on repacking/re-labeling of auto parts
2. Closure of penal proceedings under Rule 26 of the Central Excise Rules, 2002
3. Entitlement to Cenvat credit of Central Excise duty already paid

Analysis:
1. The case involved appeals by Revenue against an order regarding the liability of Central Excise duty on repacking/re-labeling of auto parts by a trading business. The main respondent was found to have not discharged due Central Excise duty after repacking/re-labeling auto components purchased from another company. The Original Authority concluded that the main respondent fulfilled the requirements under Section 11A of the Central Excise Act, 1944, leading to the closure of proceedings against all respondents. The Commissioner (Appeals) upheld this decision, prompting Revenue to file another appeal.

2. The Revenue argued that closure under Section 11A does not conclude penal proceedings under Rule 26 of the Central Excise Rules, 2002. However, the Learned AR's proposition was dismissed as unsupported by law. The closure of proceedings against the respondents was based on non-payment of Central Excise duty on auto components, which was rectified by the main respondent paying the full duty liability with interest and a 25% penalty. The Commissioner (Appeals) thoroughly examined the legal position regarding the closure of the case and found no legal infirmity in the decision to close the proceedings.

3. The respondents contended that they were entitled to Cenvat credit of Central Excise duty already paid by the company from which they purchased the auto parts for repacking/re-labeling. However, the Tribunal noted that cross appeals can only raise points decided in the impugned order. Since the issues regarding Cenvat credit were not contested or examined before the Original Authority and no appeal was made against the original order, the Tribunal rejected the cross appeals, stating that no finding could be recorded on a fresh plea made by the respondents.

In conclusion, the Tribunal dismissed the appeals by Revenue, upholding the closure of proceedings against the respondents under Section 11A and rejecting the cross appeals regarding Cenvat credit due to procedural limitations.