Commissioner of Central Excise vs CEAT Ltd.

J.P. Devadhar, J.—According to the Revenue, the following questions of law arise out of the order of the CESTAT dated March 4, 2010:

(a) Whether in the facts and circumstances of the case and in law, it is permissible for the Tribunal to go beyond its earlier order confirming the duty, etc., which was not at all assailed by the respondent ? The Revenue had challenged only the penalty part of the order and the matter was remanded back by this hon''ble court.

(b) Whether in the facts and circumstances of the case and in law, the Tribunal is justified in holding that section 11AC is not applicable when the evidence on record clearly shows that there is clearly a suppression, which was alleged in the show-cause notice and the detailed finding has been recorded by the adjudicating authority?

(c) Whether in the facts and circumstances of the case and in law, the findings of the Tribunal are perverse?

The appeal is admitted on the above questions and taken up for hearing by consent of the counsel on both sides.

The relevant facts are that by an order-in-original dated October 30, 2003 the duty amounting to Rs. 17,96,685 was confirmed for wrongful availment of the credit during the period 1998-99 with interest and penalty equivalent to the amount of duty u/s 11AC of the Central Excise Act, 1944.

Challenging the aforesaid order, the assessee filed an appeal before the CESTAT. By the order dated September 5, 2006, the CESTAT confirmed the duty demand but reduced the penalty imposed u/s 11AC of the Central Excise Act to Rs. 4,50,000. Challenging the aforesaid order, the Revenue filed an appeal in this court and this court by an order dated July 3, 2008 restored the matter to the file of the CESTAT in so far as it related to reducing the penalty levied u/s 11AC of the Act to Rs. 4,50,000. Subsequently, on a praecipe filed by the assessee, the order dated July 3, 2008 was modified on September 23, 2008 wherein it was clarified that the order dated September 5, 2006 has been set aside and that the contentions of both the sides are kept open expressly. On remand the matter was re-heard and by an order dated March 4, 2010, the CESTAT confirmed the duty demand at Rs. 16,04,322 instead of Rs. 17,96,685 as originally confirmed. The Tribunal further set aside the penalty imposed u/s 11AC of the Central Excise Act. As regards the alleged availment of Modvat credit is concerned, the Tribunal allowed Modvat credit of Rs. 90,796 on low sulphur heavy stock received from M/s. HPCL and in respect of the Modvat credit of Rs. 58,915 and Rs. 41,600 which was denied by the lower authority remanded the same to that authority for fresh consideration. Challenging the aforesaid order, the Revenue has filed the present appeal. It is not in dispute that in the meantime, the assessee has deposited the penalty amounting to Rs. 4,50,000.

In so far as the first question is concerned, no doubt that this court by its order dated July 3, 2008 had allowed the appeal filed by the Revenue thereby setting aside the order of the Tribunal dated September 5, 2006 in so far as it related to reducing the penalty imposed u/s 11AC of the Act. However, it appears that confusion had arisen in view of the clarificatory order passed by this court on September 23, 2008, wherein it was recorded that the order of the Tribunal dated September 5, 2006 has been set aside and the matter has been remanded back for fresh hearing. Even though the remand was restricted to the issue relating to the reduction of the penalty imposed u/s 11AC, the Tribunal by its order dated March 4, 2010 reconsidered the issue relating to the duty and confirmed the duty demand at Rs. 16,04,322 instead of the duty demand already confirmed at Rs. 17,96,685. Challenging the order of the Tribunal dated March 4, 2010 the Revenue has filed the present appeal.

The grievance of the Revenue is that when the issue in the earlier proceedings related to the reduction of penalty and this court by its order dated July 3, 2008 has restored the matter relating to the penalty, the Tribunal could not have, on remand, reconsidered the issue relating to the duty confirmed by the order of the Tribunal dated September 5, 2006.

To put an end to the controversy, the assessee had in fact paid the entire duty amounting to Rs. 17,96,685 with interest amounting to Rs. 1,80,439. Moreover, with a view to put an end to the controversy relating to the Modvat credit amounting to Rs. 58,915 and Rs. 41,600 which is remanded by the Tribunal, the assessee through its counsel agreed to forgo the amount of Rs. 4,50,000 already deposited with the Revenue.

Thus, the duty demand confirmed at Rs. 17,96,685 as per the original order of the Tribunal stands discharged on account of payment of the said amount with interest. Hence, the first question does not survive.

As regards the second and third questions are concerned, the finding of fact recorded by the Tribunal is that though the assessee had suppressed the fact of claiming depreciation on capital goods, it was a bona fide error and there was no intention to evade duty. Admittedly, on realising the mistake, the assessee took steps to withdraw the claim of depreciation and since that did not materialise, the assessee offered to pay the duty with interest, in these circumstances, the decision of the Tribunal that section 11AC is not attracted, cannot be faulted.

Similarly, the question of the assessing officer reconsidering the Modvat credit of Rs. 58,915 and Rs. 41,600 as per the order of the Tribunal does not arise in view of the assessee forgoing the amount of Rs. 4,50,000 deposited by the assessee. In other words, on account of the assessee paying Rs. 17,96,685 with interest of Rs. 1,80,439 and Rs. 4,50,000, the entire claim of the Revenue stands discharged. The appeal is disposed of in the above terms with no order as to costs.