Disposed

The Commissioner of Central Excise Mumbai -Iii v. Ceat Ltd.

Bombay HC12 Sept 2012CEXA/147/2011

Case brief

AI extract

What is this about?

In an appeal by the Revenue regarding the Central Excise Act, the High Court held that the Tribunal's reconsideration of the duty demand was unnecessary as the duty amount had already been paid. It upheld the Tribunal's view that Section 11AC did not apply due to a bona fide error and discharged the entire claim due to subsequent payments by the assessee.

What did the court decide?

The appeal was disposed of in the terms of the judgment with no order as to costs.

The Commissioner of Central Excise Mumbai -Iii Vs Ceat… — Banking and Recovery | Bombay HC (2012)

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY

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ORDINARY ORIGINAL CIVIL JURISDICTION

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CENTRAL EXCISE APPEAL NO. 147 OF 2011

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The Commissioner of Central Excise, Mumbai – III Commissionerate, having his office at 3^rd & 4^th Floor, Vardhan Trade Center, Road No. 10, Wagle Industrial Estate, Thane 400 604 ..... Appellant

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Versus

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CEAT Ltd.

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Having their office at Bhandup Village Road, L.B.S. Marg, Bhandup (W), Mumbai

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..... Respondent

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Mr. A.S. Rao for the appellant.

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Mr. D.B. Shroff, Sr. Advocate with Mr. Vipul Bilve i/by M/s. Mulla & Mulla for respondent.

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CORAM : J.P. DEVADHAR &

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R.D. DHANUKA, JJ.

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DATE : 12 th SEPTEMBER, 2012.

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ORAL JUDGMENT (Per J.P. DEVADHAR,J.) :

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According to the revenue, the following questions of law arise out of the order

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of the CESTAT dated 4^th March, 2010:

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(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 penalty part of the order and the matter was remanded back by this Hon'ble Court.

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(b) Whether in the facts and circumstances of the case and in law, the Tribunal is justified in holding that Sec. 11AC is not applicable when the evidence on record clearly shows that there is clearly a suppression, which

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was alleged in the show cause notice and the detailed finding has been recorded by the adjudicating authority?

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

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3. The relevant facts are that by an order-in-original dated 30^th October, 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 under section 11AC of the Central Excise Act, 1944.

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Challenging the aforesaid order, the assessee filed an appeal before the CESTAT. By order dated 5^th September, 2006, the CESTAT confirmed the duty demand but reduced the penalty imposed under section 11AC of 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 3^rd July, 2008 restored the matter to the file of CESTAT in so far as it related to reducing the penalty levied under section 11AC of the Act to Rs.4,50,000/-. Subsequently on a praecipe filed by the assessee, the order dated 3^rd July, 2008 was modified on 23^rd September, 2008 wherein it was clarified that the order dated 5^th September, 2006 has been set aside and that contentions of both the sides are kept open expressly. On remand the matter was re-heard and by

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order dated 4^th March, 2010, the CESTAT confirmed the duty demand at Rs.16,04,322/- instead of Rs.17,96,685/- as originally confirmed. The Tribunal

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further set aside the penalty imposed under section 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/-.

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5. In so far as the first question is concerned, no doubt that this Court by its order dated 3^rd July, 2008 had allowed the appeal filed by the Revenue thereby setting aside the order of the Tribunal dated 5^th September, 2006 in so far as it related to reducing the penalty imposed under section 11AC of the Act. However, it appears that confusion had arisen in view of the clarificatory order passed by this Court on 23^rd September, 2008, wherein it was recorded that the order of the Tribunal dated 5^th September, 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 under Section 11AC, the Tribunal by its order dated 4/3/2010 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 4/3/2010 the revenue has filed the present appeal.

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The grievance of the Revenue is that when the issue in the earlier

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proceedings related to the reduction of penalty and this Court by its order dated 3^rd July, 2008 has restored the matter relating to the penalty, the Tribunal could not have, on remand, reconsidered the issue relating the duty confirmed by order of the Tribunal dated 5^th September, 2006.

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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.

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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.

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As regards the 2^nd and 3^rd 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 assesee 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.

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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 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.

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The appeal is disposed of in the above terms with no order as to costs.

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(R.D. DHANUKA, J.)

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(J.P. DEVADHAR,J.)

The Commissioner of Central Excise Mumbai -Iii v. Ceat Ltd.

Case brief

What is this about?

What did the court decide?

The Commissioner of Central Excise Mumbai -Iii v. Ceat Ltd.

Case brief

What is this about?

What did the court decide?

What the court decided

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