Gujarat High Court
Diamond Power Infrastructure Ltd. vs Principal Commissioner on 26 July, 2018
Author: A.Y. Kogje
Bench: M.R. Shah, A.Y. Kogje
C/TAXAP/474/2018 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/TAX APPEAL NO. 474 of 2018
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DIAMOND POWER INFRASTRUCTURE LTD.
Versus
PRINCIPAL COMMISSIONER
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Appearance:
MR DHAVAL SHAH(2354) for the PETITIONER(s) No. 1
MR NIRZAR S DESAI(2117) for the RESPONDENT(s) No. 1
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CORAM: HONOURABLE MR.JUSTICE M.R. SHAH
and
HONOURABLE MR.JUSTICE A.Y. KOGJE
Date : 26/07/2018
ORAL ORDER
(PER : HONOURABLE MR.JUSTICE A.Y. KOGJE)
1. This appeal is preferred under Section 35G of the Central Excise Act, 1944 with Section 83 of the Finance Act, 1994 against the order no. M/10402-10403/2017 dated 14.06.2017 passed in Miscellaneous Application No. E./ROM/10720-10721/2015 and Order No. A/11084-1083/2015 dated 22.07.2015 in Appeal No. E/12930/2013 and E/12931/2013 passed by Customs, Excise and Service Tax Appellate Tribunal (CESTAT). The appeal is preferred for considering the following questions of law:
A) Whether in the facts and circumstances of the case the order of the Appellate Tribunal was perverse in as much as firstly it failed to adjudicate upon the grounds challenging penalty Page 1 of 8 C/TAXAP/474/2018 ORDER imposed by the respondent and secondly it rejected the Miscellaneous Application filed by the Appellant pointing out this mistake apparent from the record?
B) Whether in the facts and circumstances of the case and in law, the Appellate Tribunal is right in passing such order without any findings and reasoning on penalties and Interest?
C) Whether the order passed by the Appellate Tribunal is considered as violation of principles of natural justice as the points urged before the Appellate Tribunal have been disregarded without giving finding on it?
2. This Court by order dated 26.04.2018 has recorded as under:
The Appellant is a private limited company incorporated under the provisions of Companies Act, 1956 in the year 1992 and has been carrying on the business of manufacturing Cables and Conductors falling under Chapter 74, 76 & 85 of the Schedule to the Central Excise Tariff Act, 1985.
The respondent is the jurisdictional head of the Commissionerate where the manufacturing activity of the Appellant is undertaken.
3. The appellant is having a corporate office at Vadodara and a manufacturing unit at Silvassa. The appellant had availed several trading on various items such as M.S. Bar, Angles, Channels, Plastic Sheets, Asbestos Sheets, TMT Bars etc. used for erection and commission of the machinery. The Audit team visited the appellants factory and carried out verification of the Cenvat documents and gave an opinion that the Cenvat Page 2 of 8 C/TAXAP/474/2018 ORDER availed on the certain goods were not admissible.
4. The Audit objections was culminated into show cause Notice No. V.Ch. 85(4)/51/Diamond/D-City/Adj/JC/2011-12 dated 11.08.2011 demanding the Cenvat Credit amounting to Rs.17,78,263/- availed on ineligible Capital goods, demand of Rs.18,36,000/- on excess Cenvat credit availed. Demand was also raised of Rs. 2,74,771/- being wrongly paid from the Cenvat Credit Balance of Education Cess for the payment of Secondary Higher Education Cess and the demand of Rs.40,000/- for excess credit taken as issued. The proposal was also for appropriate amount paid by appellant against the respective demands.
5. The order in original dated 02.03.2012 confirmed the demand raised in the show cause notice and imposed penalty under Rule 15(2) of the Cenvat Credit Rules, 2004 read with Section 11AC of Central Excise Act, 1944, penalty of Rs.2,74,771/- on the appellant and also penalty of Rs.20,00,000/- on the Managing Director of the appellant under Rule 26 of Central Excise Rules 2002.
6. Being aggrieved, the appellant and its managing director filed appeals before the First Appellate Authority and by order dated 24.05.2013 rejected the appeal.
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C/TAXAP/474/2018 ORDER
7. Being aggrieved by the afore mentioned order of the First Appellate Authority, appellate preferred separate appeals before the CESTAT along with the stay applications. Separate order was passed on stay application staying the recovery and treating the amount deposit prior to show cause notice to be sufficient compliance.
8. By the order dated 22.07.2015, the Tribunal passed the order and allowed the appeals on the ground of the demand regarding admissibility CENVAT credit on items like M.S. Bar, Angles, Channels, Plastic Sheets, Asbestos Sheets, TMT Bars etc. was time barred. The Tribunal also allowed appeal qua 100% CENVAT credit on consultancy services availed by the appellant however, the demand regarding the payment of Secondary and Higher Secondary Education Cess from the CENVAT credit balance of Education Cess was upheld and granted liberty of taking equivalent amount of credit in the account of Education Cess.
9. It appears that the rectification application was made against the order dated 22.07.2015 on the ground that the Tribunal did not give any findings on the grounds raised regarding the penalties and interest on demand, which has been rejected.
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C/TAXAP/474/2018 ORDER
10. Heard learned advocate Mr. Dhaval Shah for the petitioner and Mr. Nirzar Desai for the respondent and perused the documents on record.
11. It is submitted that the Tribunal has not given any findings qua the penalty imposed for the alleged wrong payment of Secondary and Higher Education Cess from the CENVAT credit balance of Education Cess though, the liberty of taking equivalent amount of credit in the account of Education Cess was available. It is submitted that, no loss of revenue has arisen so as to attract Section 11(A)(C) of Central Excise Act 1944 and for consequential penalty. Though such grounds were raised the Tribunal has not addressed the same and has not given any findings.
12. It is further submitted that, similarly no finding is given upholding the penalty imposed by the adjudicating authority for alleged excess CENVAT credit taken. However, there is no discussion or finding on the point as to whether the appellant is liable for penalty under Section 11(A)(C) more particularly, when the entire amount was deposited before the issuance of show cause notice. It is submitted that the Tribunal has also not considered the arguments and given finding on the Page 5 of 8 C/TAXAP/474/2018 ORDER argument that non levy of interest when the payment of Higher Education Cess from the CENVAT credit balance Education Cess was available and therefore no question of interest when it was only a mistake in payment through a wrong account.
13. It is further submitted that, the aforementioned error of the Tribunal were the mistakes apparent on the record and therefore, the rectification application ought to have been considered by the Tribunal.
14. Learned advocate Mr. Nirzar Desai appears on behalf of the department however, no reply is filed on record.
15. Considering the impugned order of the Tribunal dated 22.07.2015, the order of the Tribunal reveals that the issue of admissibility of CENVAT credit on items like M.S. Bar, Angles, Channels, Plastic Sheets, Asbestos Sheets, TMT Bars etc. was held in favour of the appellant and it was held that the show cause notice was issued beyond normal period of limitation. Similarly, with regards the Second issue of CENVAT Credit on Consultancy service the issue was also held in favour of the appellant, however with regards to the admissibility of payment of Secondary and Higher Education Cess from the Page 6 of 8 C/TAXAP/474/2018 ORDER CENVAT credit balance of the Education Cess is concerned the Tribunal has held that, the Tribunal has not accepted the stand of the appellant and thereafter, immediately proceeded to direct the appellant for payment of interest on credit taken in excess on the ground that the same is not taken as a ground in appeal of the appellant. We have perused the pleadings before the Tribunal wherein, the court finds that in the grounds of appeal such grounds are taken, more particularly in paragraph 15 of the appeal as well as paragraph 3.0 is of the rectification application.
16. Learned advocate for the applicant rightly relies upon the judgment of this court reported in 2017 (351) alleged in the case of PADMAVATI TUBES V/s COMMISSIONER of C.EX. & S.T., VAPI and 2017(3) GSTL 113 (Guj.) in case of SCI INTERNATIONAL SECURITIES LTD. V/s. COMM. Of C.EX. & S.T., VADODARA, wherein this Court has remanded the matter back to the Tribunal on the issue of non-consideration and non dealing with the contentions raised by the appellants therein and passing a non speaking order.
17. Considering the aforementioned and in view of the fact that though the specific contentions with regards to the Page 7 of 8 C/TAXAP/474/2018 ORDER penalty and interest has been taken before the Tribunal, there is no specific finding or reasoning to justify the impugned order in so far as it concerns payment of interests and imposing of penalty on the Director. With the aforementioned observation the Order No.A/11082-11083/2015 dated 22.07.2015 in Appeal No. E/12930/2013 and Order No. M/10402-10403/2017 Dated 14.06.2017 in Miscellaneous Application No.E/ROM/107202015 are hereby quashed and the proceedings are remitted back to the Tribunal for a fresh hearing and decision on levy of penalty and interest after granting proper opportunity to raise all the contentions and the Tribunal shall assign appropriate reasons to such contentions raised. The Tribunal shall thereafter proceed to decide the appeal on its own merits within a reasonable time.
(M.R. SHAH, J) (A.Y. KOGJE, J) URIL Page 8 of 8