TMI Blog2021 (2) TMI 490X X X X Extracts X X X X X X X X Extracts X X X X ..... eously refunded for any reasons other than fraud or collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of the Act or of the rules made thereunder with intent to evade payment of duty, the person who is liable to pay duty as determined under sub-section (2) of section 11A, shall also be liable to pay penalty In the case on hand, there is no allegation of fraud or collusion or wilful misstatement or suppression of facts. The revenue seeks to bring the assessee's case under the caption contravention of the provisions of the Act or the rules made thereunder. The statute further states that such contravention should be with an intent to effect payment of duty to make the person liable for payment of penalty which will be equivalent to the amount of duty payable at the relevant point of time. As stated above, the assessee has accepted the fact that they are not entitled to avail CENVAT credit without payment of CVD. Their case initially was that they have set right the mistake and reversed the credit and also remitted the interest much prior to the audit party inspection. However, this has been found factually incorrect by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal, South Zonal Bench, Chennai ('the Tribunal' for brevity). 2.The revenue has filed the appeal by raising the following substantial questions of law: (A) Whether the Tribunal is correct in allowing the appeal of the assessee/respondent by dropping the mandatory penalty imposed on them? (B) Whether the Tribunal committed an error of law in ignoring the explanation 1 appended to Sec.11AC for deleting mandatory penalty on respondent? (C) Whether the Tribunal was justified in assuming bonafides ignoring the categorical finding by the authorities below that the conduct of the respondent amounts to suppression ? (D) Whether the Tribunal was correct in following the decisions reported in 2011 (297) ELT 481 (Kar) and 2012 (280) ELT 297 (Tri-Del) which does not apply to the facts of the case nor was it the correct law? 3.The facts which are necessary for disposal of the appeal are hereunder: The respondent is engaged in the manufacture of cotton yarn. They import certain capital goods under the Export Promotion of Capital Goods Scheme [EPCG Scheme] and paid 5% concessional rate of duty of 5% of basic customs duty and cess only. The respondent avai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had promptly reversed the wrongly availed CENVAT credit and also remitted the interest on the same. Further, it was pointed out that the CENVAT credit which was wrongly availed was reversed and the interest paid much prior to the issuance of show cause notice. The respondent also contended that there is no justification for invoking extended period of limitation, that too, after more than 2-1/2 years after the respondent had reversed the wrongly availed CENVAT credit and remitted the interest. The original authority, namely, the Additional Commissioner of Central Excise, Salem was not convinced with the explanation and by order dated 18.12.2006 confirmed the demand of duty, directed appropriation of the amount which was reversed by way of PLA debit, imposed penalty of ₹ 48,52,516/- on the respondent equivalent to that of the duty demanded by invoking Section 11AC of the Act and imposed penalty of ₹ 48 lakhs on the Managing Director and ₹ 48 lakhs on the Administrative Manager. The respondent as well as the Managing Director and the Administrative Manager filed an appeal before the Commissioner of Central Excise (Appeals), Salem and the grounds raised before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t pursue the appeal. 7.In reply, the learned senior standing counsel would submit that he has got no instructions to withdraw the appeal but has been orally informed by the appellant Department that prosecution has been launched against the respondent and therefore, no instructions can be given to withdraw the EP. 8.Nevertheless, since we have heard the matter on merits, we proceed to decide the correctness of the order passed by the Tribunal. The learned senior standing counsel is right in his submission which is based on the decision in Rajasthan Spinning and Weaving Mills , wherein the earlier decision in Dharamendra Textile Processors was clarified and it was held that once the provision of Section 11AC is found to be applicable, the concerned authority has no discretion in the matter of quantum of penalty and it has to be equal to the duty determined under Section 11A(2). There can be no quarrel over the said proposition. However, in the instant case, this issue does not arise. The question would be as to whether the provision of Section 11AC stood attracted in the case of the assessee. It is no doubt true that the assessee would not have availed CENVAT credit wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y-to-day affairs and the employee taking note of the quantum of CVD mentioned in the EPCG license had wrongly availed the CENVAT credit. It is pointed out that normally when the license is issued against the entry regarding the quantum of duty, it is normally mentioned as NIL, but however, in the respondent's case, the CVD components was quantified in the bill of entry so as to enable the Customs Department to recover the same in the even of non-fulfillment of the conditions stipulated in the EPCG Scheme. The Tribunal took note of the overall facts and circumstances of the case and found that availment of CENVAT credit without payment of CVD was done by an employee of the Company and it was a bonafide mistake. Furthermore, the Department took more than 2-1/2 years to issue show cause notice when they were fully aware that the CENVAT credit was wrongly availed by the respondent. Therefore, the finding rendered by the Tribunal on the facts and circumstances cannot be termed to be perverse for us to interfere in an appeal filed under Section 35G of the Act. 11.The Tribunal has referred to the decision of the Karnataka High Court in the case of CCE Bangalore vs. Geneva Fine Pu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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