2014 (2) TMI 213 - HC - Central Excise

Court reinstates penalty and interest, overturns Tribunal's decision due to intentional duty evasion.

The Commissioner of Central Excise Versus M/s. Hanil Lear India (P) Ltd.

The Commissioner of Central Excise Versus M/s. Hanil Lear India (P) Ltd. - 2015 (323) E.L.T. 481 (Mad.) Issues:1. Whether the Tribunal correctly dismissed the appeal regarding the imposition of penalty under Section 11AC of the Central Excise Act, 1944Rs.2. Whether the Cenvat Credit availed by the assessee should be reversedRs.3. Whether the assessee willfully suppressed material facts to evade payment of duty justifying the penalty impositionRs.Analysis:1. The appeals by the Revenue were directed against the Tribunal's order dismissing the appeal filed by the appellant regarding the imposition of penalty under Section 11AC of the Central Excise Act, 1944. The substantial question of law was whether the Tribunal was correct in passing the order without rendering a finding on the non-applicability of the penalty.2. The assessee, a manufacturer of Seats and Auto Interiors, availed Cenvat Credit on inputs destroyed due to heavy rain, for which they received an insurance claim. The Revenue issued a show cause notice stating that the credit claimed should be reversed as the inputs were not used in the final products. The Original Authority confirmed the disallowance of credit, penalty imposition, and interest demand. The Commissioner (Appeals) upheld the decision, except for waiving the penalty. The Tribunal dismissed the appeals as the assessee did not press their appeal regarding the duty demand.3. The Court noted that the assessee failed to prove that the damaged inputs were used in production, leading to the reversal of Cenvat Credit. The Original Authority found the assessee's conduct intentional in evading duty payment, justifying the penalty imposition. The first Appellate Authority wrongly deleted the penalty, as the assessee did not establish the absence of willful suppression. The Tribunal confirmed this decision without providing reasons, leading the Court to allow the Revenue's appeal and reinstate the penalty along with interest payment.In conclusion, the Court allowed the Revenue's appeal, reinstated the penalty, and upheld the interest payment. The Tribunal's decision to dismiss the appeal without proper justification was overturned, emphasizing the intentional conduct of the assessee in evading duty payment.