The Commissioner Of Central Excise vs Asmi Dyeing & Printing Works

[ Arising out of OIA No RKA/833-834/SRT-1/2008 dtd 15.12.2008 Passed by Commissioner of Central Excise and Service Tax (Appeals) Surat I ]

The Commissioner of Central Excise and Service Tax, Surat I - Appellant (s)

Vs.

Asmi Dyeing & Printing Works - Respondent (s)

Represented by :

Appellant (s) : Shri G P Thomas, Authorised Representative Respondent (s) : None

For approval and signature :

Mr. P.K. Das, Hon.ble Member (Judicial)

1 Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

No 2 Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

No 3 Whether their Lordships wish to see the fair copy of the Order?

Seen 4 Whether Order is to be circulated to the Departmental authorities?

Yes

CORAM :

Mr. P.K. Das, Hon.ble Member (Judicial)

Date of Hearing / Decision : 1/1/2015

ORDER No. A/10356 / 2015 dtd 1/1/2015

Per : Mr. P.K. Das;

None appears on behalf of the respondents. It is seen from the records that the Notice of hearing issued by the Registry was returned back with the postal remark Left. As the respondent had not informed their change of address to the Registry, it is appropriate to decide the appeal in their absence.

2. The respondents were engaged in processing the Grey Fabrics. Show cause notice dtd 3.7.2007 was issued proposing demand/recovery of cenvat credit of Rs 18,18,563/- alongwith interest and penalty on the respondent and imposition of penalty on Shri Devendra A Garuda, Partner of the respondent. The Adjudicating Authority confirmed that the demand of cenvat credit of Rs 18,18,563/- alongwith interest and imposed penalty of equal amount of duty under Rule 13(2) of Cenvat Credit Rules 2002 [presently Rule 15(2)] of Cenvat Credit Rule 2004 read with Section 11AC of the Central excise Act 1944. A penalty of Rs 1,80,000/- was imposed on Shri Devendra A Garuda partner/authorised signatory of the respondent firm. By the impugned order, Commissioner (Appeal) modified the adjudication order, in so far as penalty on the respondent was reduced to Rs 4,54,641/- under Rule 13(1) of the Cenvat Credit Rule and the penalty on Shri Devendra A Garuda was set aside. Hence Revenue filed this appeal against the respondent.

3. On a query from the Bench, the Ld. Authorised Representative for the Revenue submits that the respondents had not filed any cross appeal. He submits that the demand of cenvat credit for the extended period was upheld by the Commissioner (Appeal). So, the Commissioner (Appeals) is not empowered to set aside penalty under Section 11AC of the Central Excise Act 1944. He relied upon the decision of the Honble Supreme court in the case of Union of India vs. Dharmendra Textile Processors - 2008(231)ELT.3(SC).

4. After hearing the Ld Authorised Representative for the Revenue and on perusal of the records, the relevant portion of the order of the Commissioner (Appeals) is reproduced below :

 However, the evidence are not sufficient to conclude that the appellants are part to fraud. Further no investigations have been carried out to bring out that the appellants are party to fraud or that the cenvat credit has availed in contravention of the rules with intention to evade Central Excise duty. In my view, the conclusion of suppressions of facts with intention to avail wrong credit is based on assumption and presumptions and not on solid evidence. The findings of the leaned adjudicating authority, based on which mandatory penalty under Rule 13(2) read with Section 11AC has been invoked, are not just & proper. The findings that Cenvat Credit has been availed in contravention of cenvat credit Rules, 2002 is upheld. I am of the view that the appellants are more appropriately liable for penalty under Rule 13(1) of the cenvat Credit rules, 2002 clearly provide for penalty where credit is taken without reasonable steps to ensure that inputs are duty paid.

5. Show Cause Notice dtd 3.7.2007 was issued proposing demand of Cenvat Credit for the period from October 2003 to May 2004 invoking proviso to Section 11A(1) of the Central Excise Act 1944. Commissioner (Appeals) upheld demand of duty for the extended period of limitation. Then the findings of the Commissioner (Appeals), that the respondent is not part of fraud is contrary and mis-conceived, in so far, as the demand of Cenvat Credit for the extended period would be invalid. But, the Commissioner (Appeals) upheld the demand for the extended period and set aside penalty under Section 11AC, as there was no fault on the part of the appellant, are contradictory and cannot be sustained.

6. In view of the above discussions, I set aside the impugned order passed by the Commissioner (Appeals) to the extent appeal filed against Respondent. The matter is remanded to the commissioner (Appeals) to decide afresh after giving proper opportunity of respondent. The appeal filed by the Revenue is allowed by way of remand.

(Dictated and pronounced in the Court)

(P.K. Das) Member (Judicial)

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