2019 (9) TMI 1150 - HC - Central Excise

Clandestine removal - case against the Appellant was that the Appellant had cleared certain goods without accounting for them in SAP-ERP software system and without payment of duty - Revenue neutrality - period of demand was from April 2003 to November 2005 - HELD THAT - The Tribunal has not dealt with the specific contention raised by the Appellant on revenue neutrality. Therefore, as far as this ground is concerned, the order of the Tribunal is non-speaking. The Tribunal ought to have, after referring this specific contention of the Appellant, dealt with the same on merits - Since the Tribunal has not considered the ground raised by the Appellant on revenue neutrality, the appeal will have to be remanded to the Tribunal for consideration of the issue recorded in respect of the contention raised in paragraph-3.2(i) of the impugned order regarding the transaction between Unit No.1 and Unit No.2 being revenue neutral. The appeal on remand will be considered only in respect of the aspect of revenue neutrality as urged by the Appellant in respect of unfinished goods between Unit No.1 and Unit No.2. The question be decided on merits. The appeal of the Appellant is restored before the Tribunal to be considered.

Summary

Issues:
Challenge to order passed by Customs, Excise and Service Tax Appellate Tribunal on penalty and demand confirmed against Appellant under Central Excise Act, 1944.

Analysis:
1. The Appellant filed an appeal challenging the order imposing penalty and confirming demand by the Commissioner of Central Excise and Sales Tax, Mumbai. The Tribunal dismissed the appeal, leading to questions of law regarding penalty, revenue neutrality, and procedural fairness.

2. The Appellant manufactures various goods falling under different chapters of the Central Excise Tariff Act, 1986 at two units. The demand of duty was raised for finished goods and intermediate products, alleging evasion of excise duty.

3. The Tribunal upheld the demand of penalty, rejecting the Appellant's defense of a software error leading to short payment of duty. The Tribunal cited relevant case laws to support its decision, emphasizing that duty payment before a show-cause notice does not absolve the Appellant from penalty.

4. Regarding the contention of revenue neutrality between the two units of the Appellant, the Tribunal's order was non-speaking. The Appellant's argument on revenue neutrality was not adequately addressed, leading to a remand of the case for further consideration by the Tribunal.

5. The High Court set aside the Tribunal's order on revenue neutrality, restoring the appeal for reconsideration on this specific issue. The Court confirmed the Tribunal's findings on penalty and finished goods, emphasizing that the issue of revenue neutrality pertains only to unfinished goods between the Appellant's units.

This detailed analysis covers the key aspects of the legal judgment, including the challenges raised by the Appellant, the Tribunal's decisions on penalty and revenue neutrality, and the High Court's directions for further consideration on the issue of revenue neutrality.