Custom, Excise & Service Tax Tribunal
M/S.Recron Synthetics Ltd vs Cce, Allahabad on 15 January, 2008
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, R.K. PURAM, W.B. NO.2, PRINCIPAL BENCH
NEW DELHI, COURT NO. III
Excise Appeal No.1921 of 2006-SM (BR)
[Arising out of order in appeal No.22/CE/ALLD/2006 dated 28.2.2006 passed by the Commissioner (Appeals) Central Excise, Allahabad]
Date of Hearing/ Decision:15.1.2008
For approval and signature:
Hon'ble Mr. P.K. Das, Member (Judicial)
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1. Whether Press Reporters may be allowed to see :
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982.
2. Whether it should be released under Rule 27 of the :
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy :
of the Order?
4. Whether Order is to be circulated to the Departmental :
authorities?
M/s.Recron Synthetics Ltd. Appellants
[Rep. by Mr. Ravi Raghvan, Advocate]
Vs.
CCE, Allahabad Respondent
[Rep. by Mr. S. Gautam, SDR) CORAM: Mr. P.K. Das, Member (Judicial) O R D E R NO../Dated:15.1.2008 Per P.K. Das:
The appellant filed this appeal against imposition of penalty and payment of interest.
2. The adjudicating authority dropped the proceedings as the appellants deposited the duty before issue of show cause notice on irregular availment of credit. Revenue filed appeal before the Commissioner (Appeals). By the impugned order, the Commissioner (Appeals) imposed penalty of Rs.1,00,000/- and recovery of interest.
3. Ld. Advocate on behalf of the appellant submits that recovery of interest under Section 11 AB was inserted on 11th May, 2001. In this case, credits have been reversed prior to 11.5.2001 and, Section 11 AB of the Central Excise Act is not applicable. He further submits that the appellant availed irregular credit on bona fide manner and reversed the same before issue of the show cause notice and, penalty cannot be imposed. He relied upon the decision of the Punjab & Haryana High Court in the case of Commissioner of Central Excise Vs. Sigma Steel Tubes Ltd. Reported in 2007 (218) ELT 657 (P&H) and Commissioner of Central Excise, Ludhiana Vs. Steel Strips Ltd. reported in 2008(221) ELT 193 (P&H). He also cited several decisions of the Tribunal and the Honble High Court.
4. Ld. DR on behalf of the Revenue reiterates the findings of the Commissioner (Appeals). He submits that the appellant availed irregular credit and there is a contravention of the Rules and, therefore, imposition of penalty is justified.
5. After hearing both the sides and on perusal of the records, I agree with the submission of the ld. Advocate on recovery of interest. It is seen that the credits have been availed and reversed prior to 11.5.2001 and the recovery of interest under Section 11AB of the Act is not warranted. Regarding imposition of penalty, the ld. Advocate submits that in reply to the show cause notice, they have categorically stated that irregular availment of credit is in a bona fide manner. I find that the Commissioner (Appeals) imposed penalty on the ground of irregular availment of credit, without considering the submission of the appellant. The Honble High Court and the Tribunal in a series of decisions held that duty deposited before issue of the show cause notice, penalty cannot be imposed under Section 11 AC of the Central Excise Act, 1944. The appellant availed the credit in bona fide manner and reversed the same before issue of the show cause notice, penalty cannot be imposed. I find that the Commissioner (Appeals) did not examine the submission of the appellant that they availed irregular credit bonafidely.
6. Accordingly, I set aside the impugned order insofar as the recovery of interest is regarding the imposition of penalty, the matter is remanded back to the Commissioner (Appeals) to decide afresh after considering submission of the appellant. The appeal is disposed of in the above terms.
Order dictated & pronounced in open court on 15.1.2008.
` ( P.K. Das ) Member (Judicial) Ckp.