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2010 (9) TMI 1046 - AT - Central Excise
Issues Involved:
1. Recovery of inadmissible Cenvat credit of service tax. 2. Recovery of interest on inadmissible Cenvat credit. 3. Imposition of penalty on the appellant. 4. Imposition of personal penalty on the Director. Detailed Analysis: 1. Recovery of Inadmissible Cenvat Credit of Service Tax: The adjudicating authority disallowed the Cenvat credit up to Service Tax and ordered the recovery of Rs. 5,07,564/-. The primary issue was whether the appellants wrongly availed Cenvat credit for the service tax paid on the transportation of CNG used for electricity production, which was sold to other units. The adjudicating authority found that the appellants were not entitled to avail and utilize the credit of service tax paid on transportation of CNG, as the electricity was sold to other units. This finding was based on the fact that the appellants did not disclose the sale of electricity to other units to the department, which constituted suppression of facts. Consequently, the extended period of limitation under Section 11A(1) of the Central Excise Act was invoked for recovery. 2. Recovery of Interest on Inadmissible Cenvat Credit: The adjudicating authority ordered the recovery of interest under Rule 14 of the Cenvat Credit Rules, 2004 read with Section 11AB of the Central Excise Act, 1944. The interest was deemed recoverable because the appellants had availed and utilized inadmissible Cenvat credit, thereby defrauding the government's legitimate revenue. 3. Imposition of Penalty on the Appellant: A penalty equal to the amount of service tax credit wrongly availed and utilized (Rs. 5,07,564/-) was imposed under Rule 15(2) of the Cenvat Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944. The adjudicating authority held that the appellants deliberately and knowingly suppressed material facts with a mala fide intention to avail inadmissible credit. This deliberate suppression justified the imposition of a penalty. 4. Imposition of Personal Penalty on the Director: A personal penalty of Rs. 1,50,000/- was imposed on the Director under Rule 26 of the Central Excise Rules, 2002. The adjudicating authority found that the Director had suppressed facts from the department with an intent to wrongfully avail service tax credit, thereby rendering himself liable to penal action. Appellate Tribunal's Findings: The Commissioner (Appeals) upheld the adjudicating authority's order without independent discussion or consideration of the facts and issues. The Tribunal observed that the Commissioner (Appeals) had merely copied the adjudicating authority's findings verbatim, showing a total non-application of mind. The appellate authority is expected to independently review the records and consider the points raised with reference to the facts and applicable law. The Tribunal found the impugned order unsustainable due to this lack of independent analysis and remanded the matter to the lower appellate authority for fresh consideration in accordance with the law. Conclusion: The appeals were allowed, and the impugned order was quashed. The matters were remanded to the lower appellate authority to reconsider the appeals afresh, ensuring compliance with legal provisions and proper assessment of the facts and issues involved.
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