Cce, Chennai vs M/S. Pan Electronics India Ltd

(Arising out of Order-in-Appeal No. 21/2007 (M III) dated 31.07.2007, passed by the Commissioner of Central Excise (Appeals), Chennai).

For approval and signature

Honble Shri R. PERIASAMI, Technical Member

CCE, Chennai : Appellant

Vs.

M/s. Pan Electronics India Ltd. : Respondent

Appearance

Shri L. Pannerselvan, AC (AR), for the applicant

Shri J. Shankararaman, Adv.,for the respondent

CORAM

Honble Shri R. PERIASAMI, Technical Member

Date of Hearing/Decision: 17.04.2015

FINAL ORDER No. 40442 / 2015

Revenue filed this appeal against the impugned order dated 31.07.2007, against non imposition of equal penalty.

2. The brief facts of the case are that the show cause notice dated 22.01.2003 was issued to the respondents demanding reversal of cenvat credit on the inputs LDO was not received in their factory but diverted to their sister unit. The Additional Commissioner in his order No. 28/03 dated 30.09.2003 confirmed the entire demand of Rs 11,40,011/- and imposed equivalent penalty and appropriated an amount of Rs. 4,59,611/- already paid by the respondent. On appeal, the Commissioner (Appeals) in his order No. 12/2004 dated 21.01.2004 remanded the case to the adjudicating authority with a direction to carry out appropriate verification of related documents about the genuineness of receipts of inputs and admissibility of the challans in question. The adjudicating authority in his order dated 31.02.2005 dropped the proceedings and held that the inputs have been duly received inside the factory and accounted, as per the Cenvat Credit Rules.

3. Revenue preferred appeal before the Commissioner (Appeals) on the grounds that adjudicating authority erred in dropping the entire demand of reversal of credit whereas the respondents are liable to reverse the cenvat credit availed on the inputs used in the generation of electricity diverted to other units. The Appellate Authority set aside the impugned order and allowed the Revenue appeal in respect of demand of duty along with interest. However, the Commissioner (Appeals) extended the reduced penalty of 25% under Section 11AC to Rs. 1,15,000/- on the ground that the respondents have already paid the amount of Rs. 4,59,611/- before issue of show cause notice. He held that the respondent is entitled for 25% of penalty within 30 days of communication of the Commissioners Order.

4. Revenue filed appeal for restoration of equal penalty under 11AC. Ld. AR reiterated the grounds of appeal and relied on the following case laws in support of his contention:

1. CCE, Delhi-III Vs. Machino Montell (I) Ltd. 2006 (202) ELT 398 (P & H)

2. UOI Vs. Rajasthan Spinning & Weaving Mills 2009 (238) ELT 3 (S.C.)

5. On the other hand, the Ld. Advocate for the respondent reiterated the cross objections filed by them and relied on the decision of the Honble High Court of Gujarat in the case of CCE, Surat-1. Vs. Rita Dyeing & Printing Mills Pvt. Ltd. and submits that the Commissioner (Appeals) has rightly restored the demand of cenvat credit on inputs used for generation of electricity diverted to other units. He further submits that the entire amount was voluntarily paid by them before issue of show cause notice. He further submits that since the original authority has dropped the entire proceedings and only in the OIA the demand of cenvat credit on the inputs used in generation of electricity diverted to other units was restored for the first time, and the Commissioner (Appeals) has rightly allowed as per the proviso of Section 11AC they are entitled for the reduced penalty of 25%. He relied upon the decision of the Honble High Court of Gujarat in the case of Rita Dyeing & Printing Mills Pvt. Lt. (supra). He further submits that the original show cause notice was issued only for the non-receipt of inputs in their factory whereas the Commissioner (Appeals) has raised a fresh ground in the OIA, which was not in the show cause notice or in the OIO.

6. I have carefully considered the submissions of both the sides. The short issue involved in this case is reduced penalty of 25% extended by the LAA is correct of otherwise. The LAA in his order clearly brought out the reasons in detail in his findings. Appellant succeeded before the adjudicating authority as he dropped the entire demand raised in the show cause notice dated 31.03.05. The Revenue preferred appeal against the adjudication order on the demand of cenvat credit on inputs utilized in the manufacturing of electricity diverted to other units. The LAA has allowed revenue appeal and confirmed the demand with interest. Therefore, it is evident that the adjudicating authority has dropped the entire proceedings, it is only on appeal by the Revenue, the Commissioner (Appeals) has restored the demand of Rs.4,59,611/- for the first time. Therefore, the LAA has rightly held that the respondents are eligible for reduced penalty within 30 days. Therefore, I do not find any infirmity in the order and the above facts are supported by the decision of the Honble High Court of Gujarat in the case of Rita Dyeing & Printing Mills Pvt. Ltd. (supra). The demand confirmed for the first time by the Commissioner (Appeals). Therefore I do not find any merit Revenue appeal. Accordingly, Revenue appeal is rejected and the impugned order is upheld.

(Order pronounced and dictated in the open Court)

(R. PERIASAMI) TECHNICAL MEMBER

BB

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