2019 (10) TMI 1096 - AT - Central Excise

Imposition of penalty - credit reversed alongwith interest paid before the issuance of SCN - mala fide on the part of the appellant or not - HELD THAT - In the impugned order the Commissioner (A) has misconstrued the appeal before him and has only observed that the issue involved in the appeal before him is with regard to the imposition of penalty. Further, the Commissioner (A) though has observed that there is no mala fide in paying the duty along with interest at the time of audit and has also observed that the appellant should not have been burdened with penalty but still the Commissioner (A) has remanded the case back to the original authority on the question of imposition of penalty. Further, the original authority has also not followed the direction of the Tribunal and examined the merits of the case and has rejected the claim of the appellant on the ground that they have accepted their fault during the audit and has reversed the same. Having done that, the original authority came to the conclusion that they are precluded to challenge the merit. This case needs to be remanded back to the original authority to comply with the direction and decide the whole case on merits as well as on limitation - Appeal allowed by way of remand.

Summary

Issues:
- Appeal against order remanding the matter to the Original Authority for de novo adjudication only on penalties.
- Failure to consider facts and law in passing the impugned order.
- Allegations of suppression with intent to evade payment of duty.
- Misconstrued appeal before the Commissioner (A) leading to remand on the question of penalty.
- Failure to adhere to the Tribunal's direction to consider the case on merits.

Analysis:
The appeal in question was directed against an order remanding the matter to the Original Authority solely for de novo adjudication on penalties. The case involved irregularities in availing CENVAT credit and short-payment of duty by the appellants, who are engaged in the manufacture of specific products falling under Chapter Heading 39 of the Central Excise Tariff Act, 1985. After a show-cause notice was issued, the Original Authority confirmed the demand, including penalties. The Commissioner (A) upheld this decision, prompting the appellant to appeal before the Tribunal. The Tribunal had previously remanded the case to the Original Authority for a fresh order on merits. However, in the subsequent de novo adjudication, the Original Authority dropped part of the penalty but confirmed a substantial amount under Rule 15 of CENVAT Credit Rules, 2004. The Commissioner (A) then remanded the matter again, focusing solely on the imposition of penalties without considering the submissions made on merits.

The appellant argued that the impugned order failed to consider both facts and the law, as directed by the Tribunal previously. The appellant contended that the authorities did not comply properly with the Tribunal's earlier directive to consider the case on merits. The Original Authority, in the de novo adjudication, discussed the case's merits but did not provide any findings and wrongly confirmed the penalty for alleged suppression with intent to evade duty payment. The Commissioner (A) also erred by not considering the grounds raised on merits and remanding the matter solely on the penalty issue. The Tribunal's specific direction to consider the case on merits was not adhered to in the impugned order, according to the appellant.

On the Revenue's side, it was acknowledged that the appellant had accepted fault during the audit, reversed the CENVAT credit, and paid interest. The Revenue argued that after admitting fault, the appellant could not contest the case on merits. However, the Commissioner (A) failed to return any findings on merits despite the grounds raised by the appellant.

After considering both parties' submissions and the case records, the Tribunal found that the impugned order was unsustainable in law. The Commissioner (A) misconstrued the appeal before him, focusing only on the penalty issue, despite acknowledging no mala fide intent in paying duty and interest during the audit. The Original Authority also did not follow the Tribunal's direction to examine the case on merits and wrongly concluded that the appellant could not challenge the merit after admitting fault during the audit. As a result, the Tribunal set aside the impugned order, allowing the appeal and remanding the case back to the Original Authority to comply with the Tribunal's earlier directive to decide the case on merits and limitation.