2011 (9) TMI 605 - AT - Central Excise

Appellate Authority reduces penalty, stresses disclosure of facts, orders consolidated hearing for efficiency

The Appellate Authority reduced the penalty imposed on the Appellant under Section 11AC of the Central Excise Act, 1944 to Rs. 50,000 from Rs. 21,13,778, ... Penalty - Held That:- When input cleared under cover of the proper invoices, there could be no suppression of facts with intent to evade any payment of duty. The conduct of appellant unquestioned there could be no penalty. Commissioner (Appeals) granted benefit of reduced penalty - Revenue filed cross objection - Assessee suppressed the above fact - Held That:- Why appeal of assessee filed on 16.1.09 was processed and appeal filed by revenue on 1.1.09 didn’t. Registry is required to explain the lapse since public interest suffers if no tagging of connected appeals or common cause appeals is made. It is high time to develop or upgrade the software to detect above disintegration and prevent conflict in decisions. Registry shall issue fresh notice for both the appeal. Issues:Levy of penalty under Section 11AC of Central Excise Act, 1944 read with Rule 15 of Cenvat Credit Rules, 2004; Allegation of suppression of fact by the Assessee; Registry's failure to connect related appeals causing conflict in decisions.Analysis:1. Levy of Penalty: The second appeal focused on the reduction of penalty imposed on the Appellant under Section 11AC of the Central Excise Act, 1944. The penalty was reduced to Rs. 50,000 from Rs. 21,13,778 by the Appellate Authority. The Revenue contended that the reduction was unjustified due to the questionable conduct of the Appellant. However, the Appellate Authority noted that there was no suppression of facts by the Appellant as the inputs were cleared with proper invoices, leading to the reduction in penalty. The appeal of the Appellant was allowed based on this finding.2. Allegation of Suppression of Fact: On the following day of the hearing, it was brought to the Court's attention that the Assessee did not disclose the pendency of the Revenue's appeal against the reduction of penalty made by the Commissioner (Appeals). The Court recalled the previous day's order to ensure justice as suppression of facts nullifies legal actions. The Registry's failure to connect related appeals led to confusion, and it was emphasized that a system should be in place to prevent conflicting decisions arising from common causes.3. Registry's Failure and Conflict in Decisions: The Registry's oversight in processing related appeals was highlighted, as the appeal filed by the Revenue on the same issue as the Appellant's appeal was not given attention. It was noted that there was a lack of a system to connect appeals arising from common causes, leading to potential conflicts in decisions. To address this issue, the Division Bench was directed to take jurisdiction over both appeals for a consolidated hearing to avoid conflicting outcomes and ensure justice.In conclusion, the judgment addressed the reduction of penalty, the importance of disclosing all relevant information, and the necessity for an efficient system in the Registry to prevent conflicts in decisions arising from related appeals. The decision emphasized the need for clarity and consistency in legal proceedings to uphold the principles of justice.