Gujarat High Court
Commissioner Of Central Excise vs M/S Ineos Abs (India) Ltd on 5 May, 2010
Gujarat High Court Case Information System
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TAXAP/744/2009 10/ 12 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT
AHMEDABAD
TAX APPEAL No.744 of 2009
For
Approval and Signature:
HONOURABLE
MR.JUSTICE D.A.MEHTA Sd/-
HONOURABLE
MS.JUSTICE H.N.DEVANI
Sd/-
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1
Whether Reporters of
Local Papers may be allowed to see the judgment ?
NO
2
To be referred to
the Reporter or not ?
NO
3
Whether their
Lordships wish to see the fair copy of the judgment ?
NO
4
Whether this case
involves a substantial question of law as to the interpretation of
the constitution of India, 1950 or any order made thereunder ?
NO
5
Whether it is to be
circulated to the civil judge ?
NO
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COMMISSIONER OF CENTRAL EXCISE
AND CUSTOMS VADODARA-I - Appellant(s)
Versus
M/S INEOS ABS (INDIA) LTD. -
Opponent(s)
===================================================
Appearance
:
MR
RJ OZA for Appellant(s) : 1,
MR
DHAVAL K SHAH for MR PARESH M DAVE for the
Opponent
===================================================
CORAM
:
HONOURABLE
MR.JUSTICE D.A.MEHTA
and
HONOURABLE
MS.JUSTICE H.N.DEVANI
Date : 05/05/2010
ORAL
JUDGMENT
(Per : HONOURABLE MS.JUSTICE H.N.DEVANI) Appellant-revenue has challenged order dated 23.09.2008 made by the Customs, Excise and Service Tax Appellate Tribunal proposing the following two questions:
Whether in the facts and circumstances of the case, the Tribunal has committed a substantial error of law in remanding case back to original adjudicating authority for quantification of demands within period of limitation by applying decision of the Tribunal in case of Raj Hans Metals (P) Ltd. v. Commissioner of C.Ex., Rajkot reported in 2007(8) S.T.R. 498 (Tri.Ahmd.)?
Whether the finding of the Hon'ble Tribunal that this is a case of 'issue of interpretation of provisions of Cenvat Credit Rules 2004', which is contrary to the provisions of Rule 2(1) of the Cenvat Credit Rules, 2004 is legal and proper.
On 31.03.2010 while issuing notice, this Court had passed an order in the following terms:
Heard learned advocate appearing for the appellant.
Considering the submissions of respondent-assessee recorded by the Tribunal and the final finding recorded by the Tribunal, prima facie, it appears that the Tribunal has committed an error in issuing direction to recompute the demand of duty on the basis of issue of limitation.
Hence, NOTICE returnable on 21.04.2010. Direct service permitted.
In response to the notice issued by this Court, the respondent has put in appearance and is represented by learned advocate Mr.Dhaval Shah.
Having regard to the limited controversy involved in the matter, the appeal is taken up for final hearing today.
Heard the learned advocates for the respective parties.
ADMIT.
The following substantial question of law arises for consideration:
Whether the Customs, Excise and Service Tax Tribunal was justified in law in passing an order on the issue of limitation without recording the facts and the stand of the other side?
Show cause notice dated 17.10.2007 came to be issued against the respondent for recovery of CENVAT credit wrongly taken and utilised by it for the period 10.09.2004 to 31.12.2006 under rule 14 of the CENVAT Credit Rules read with section 73 of the Finance Act, 1994, by invoking the extended period of limitation of five years under the said provisions. The show cause notice came to be adjudicated vide order dated 20.12.2007, whereby demand of Cenvat Credit amounting to Rs.5,40,148/- under Rule 14 of the Cenvat Credit Rules, 2002/2004 came to be confirmed with equal amount of penalty along with interest. The respondent carried the matter in appeal before Commissioner (Appeals) and partly succeeded. The respondent carried the matter in further appeal before the Tribunal. Before the Tribunal, the respondent contested the demand only on the point of limitation. The Tribunal vide the impugned order held that the demand was hit by the bar of limitation. The Tribunal also held that since the issue concerned the bona fide interpretation of the provisions of the Cenvat Credit Rules, 2004, in relation to the availability of credit of service tax paid, penalty imposed by the respondent was not called for. The Tribunal, accordingly, set aside the order impugned before it and remanded the matter to the adjudicating authority for quantification of the demand within the period of limitation.
Mr.R.J.Oza, learned Senior Standing Counsel for the appellant-revenue, has invited attention to the impugned order of the Tribunal to point out that while hearing the application for waiver of pre-deposit, the Tribunal had decided the appeal without affording any opportunity of hearing to the revenue on the question of limitation. It is further submitted that even on the question of penalty, the Tribunal has without granting any opportunity of hearing to the revenue set aside the penalty.
The impugned order of the Tribunal reads thus:
After dispensing with the condition of pre-deposit of duty and penalty, we proceed to decide the appeal itself in as much as the demand stand contested only on the point of limitation.
2. Learned advocate Shri Willingdon Christian for the appellant fairly concedes that the issue of availability of service tax paid on erection, commission and installation of wind-mill for generation of electricity away from factory premises, stand decided against them by the Tribunal s decision in case of M/s Rajhans Metsl (P) ltd. Vs. CCE Rajkot 2007 (8) STR 498 (Tri-Ahmd.), as also in case of M/s Atul Auto Ltd/ Vs CCE Rajkot vide Order No.A/332/WZB/Ahmedabad/2008, dt. 29.02.08. However, relying upon the very same judgements, learned advocate submits that Tribunal has observes that this is a issue of interpretation and as such, there was no justification for imposition of penalty. By applying the same principle to the present case, he submits that the demand for the period 10.9.04 to 31.10.06 was raised on 17.10.07. As such, major part of the demand would be hit bar of limitation.
3. We agree with the learned advocate that the issue being a bonafide interpretation of provisions of Cenvat Credit Rules, 2004, in relation to availability of credit of service tax paid and there being no malafide on the part of the appellant, and by following the observations made in the above decisions in the case of Rajhans Metals, the benefit of time bar has to be extended. For the same reason, penalty imposed upon the appellant is not called for. We, accordingly, set aside the impugned order and remand the matter to the original adjudicating authority for quantification of the demands within the period of limitation.
4. Appeal as also stay petition gets disposed off in above manner.
On a bare reading of the impugned order of the Tribunal, it is apparent that the matter was listed for hearing of the application for waiver of pre-deposit. However, the Tribunal dispensed with the condition of the pre-deposit and proceeded to hear the appeal since the respondent-original appellant had contested the demand only on the point of limitation. The Tribunal has thereafter recorded the concession made by the learned advocate for the respondent that the issue stands covered against the respondent by the decisions referred to in the impugned order and has accepted the contention raised by the learned advocate for the respondent that major part of the demand would be hit by the bar of limitation. However, in the entire order there is not even a whisper as regards the stand of the other side, viz. the revenue, on the point of limitation. A perusal of the order of Commissioner (Appeals) indicates that while relying upon very same judgment on which the Tribunal has placed reliance, Commissioner (Appeals) has given findings as to why the extended period of limitation had been correctly invoked by the adjudicating authority as well as on the ground of penalty. The Tribunal in the impugned order has not given any reasons as to why the finding recorded by Commissioner (Appeals) was not correct and as to why it was required to take a different view.
Moreover, as is evident from the opening part of the impugned order, the Tribunal had taken up the matter for hearing as the learned advocate has contested the demand only on the ground of limitation. However, after recording thus, the Tribunal also proceeded to hear the learned advocate for the respondent on the question of penalty and without recording any submissions made on behalf of the revenue and apparently without affording any opportunity of hearing on that count, the Tribunal has set aside the penalty also.
It is settled legal position as laid down by the Apex Court in a catena of decisions that it is not sufficient in a judgment to give conclusions alone but it is necessary to give reasons in support of the conclusions arrived at. In the present case, as is apparent from a plain reading of the order of the Tribunal, the Tribunal has not given any reasons as to why the larger period of limitation could not have been invoked and as to why the findings recorded by Commissioner (Appeals) on question of invocation of the extended period of limitation were erroneous. Besides, it is also apparent that the matter has been taken up for hearing while considering the application for waiver of pre-deposit and the revenue has not been given any opportunity of hearing on the question of limitation, and as such the impugned order of the Tribunal stands vitiated on the ground of breach of principles of natural justice and as such cannot be sustained.
Moreover, though the appeal had been contested only on the aspect of limitation, the Tribunal has also heard the learned advocate for the respondent on the question of penalty, that too, without recording any submissions of the other side and has set aside the order of penalty also. Thus, the part of the order setting aside the penalty also suffers from the breach of principles of natural justice, inasmuch as revenue does not appear to have been granted any opportunity of hearing. Thus, the impugned order of Tribunal suffers from the vice of being an unreasoned order insofar as the question of limitation is concerned, and from the vice of breach of principles of natural justice on the aspect of limitation as well as penalty, and as such cannot be sustained.
For the foregoing reasons, the appeal succeeds and is allowed in the following terms with no order as to costs. The impugned order of the Tribunal is hereby quashed and set aside. Appeal No.E/819/2008 is restored to the file of the Tribunal. The Tribunal shall decide the same afresh in accordance with law, after affording an opportunity of hearing to the parties. The question stands answered accordingly.
Sd/-
[D. A. MEHTA, J] Sd/-
[ H.N.DEVANI, J] *** Bhavesh* Top