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Central Excise and Customs, Daman Commissionerate v. M/S. Sahakari Khand Udyog Mandli Ltd.

Bombay HC29 Feb 2012CEXA/231/2006

Case brief

AI extract

What is this about?

This appeal challenged a CESTAT order setting aside penalty and interest imposed for wrongful availment of Modvat credit. The High Court noted the earlier relied-on Tribunal decision was reversed by the High Court, and the Supreme Court held penalty under Section 11AC is mandatory.

What did the court decide?

Impugned decision of CESTAT dated 20.9.2005 is quashed and set aside; matter restored for de novo consideration.

Central Excise and Customs, Daman Commissionerate Vs M/S. Sahakari… — Corruption | Bombay HC (2012)

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11.CEXA.231-06

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION

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CENTRAL EXCISE APPEAL NO.231 OF 2006

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Commissioner of Central Excise

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& Customs, Daman Commissionerate ..Appellant. Vs. M/s. Sahakari Khad Udyog Mandli Ltd., Gandevi, Dist. Valsad. ..Respondent. ....

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None for the Appellant. Mr. V.P. Sawant, for the Respondent.

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CORAM : J. P. DEVADHAR & A.R. JOSHI, JJ. DATED : 29th FEBRUARY, 2012.

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P.C.

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This appeal was admitted on 6.9.2007 on the following questions of law :

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(a) Whether CESTAT was justified in setting aside penalty, interest and redemption Fine, imposed by adjudicating authority by order in Original dated 5.11.99 against respondent for wrongful availment of Modvat credit on capital goods and also depreciation under section 32 of Income Tax Act, 1961 on duty element, on the basis of judgment Tribunal in the case of M/s. CCE Delhi III, Gurgaon Vs. M/s. Machino Montel (1) Ltd. 2004 (168) ELT 466 (Tri.L.B.)?

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11.CEXA.231-06

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(b) Whether the liability to pay equivalent penalty under rule 57U(6) and to pay prescribed interest under rule 57U(8) of Central Excise Rules, 1944 is mandatory when the demand of reversal of Modvat credit on capital goods is confirmed under rule 57U(3) by the adjudicating authority?”

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The perusal of the order of the CESTAT shows that the Tribunal has allowed the claim of the assessee by relying upon the Larger Bench decision of the Tribunal in the case of M/s. CCE Delhi III, Gurgaon Vs. M/s. Machino Montel (1) Ltd. reported in 2004 (168) ELT 466 (Tri. LB).

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The decision of the Larger Bench in the case of M/s. Machino Montel (1) Ltd. (supra) has been reversed by the Panjab and Haryana High Court. Moreover, the Apex Court in the case of Union of India Vs. Rajasthan Spinning and Weaving Mills reported in 2009 (238) ELT 3 (SC), has held that the penalty under Section 11AC is mandatory.

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In this view of the matter the impugned decision dated 20.9.2005 is quashed and set aside and the matter is restored to the file of the CESTAT for de novo consideration and in accordance with law. Contentions of both the parties are kept open. The appeal is disposed of accordingly with no order as to costs.

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(A. R. JOSHI, J.)

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(J. P. DEVADHAR,J.)

Central Excise and Customs, Daman Commissionerate v. M/S. Sahakari Khand Udyog Mandli Ltd.

Case brief

What is this about?

What did the court decide?

Central Excise and Customs, Daman Commissionerate v. M/S. Sahakari Khand Udyog Mandli Ltd.

Case brief

What is this about?

What did the court decide?

What the court decided

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