2016 (11) TMI 421 - AT - Central Excise

CESTAT Mumbai Overturns Order on Tax Credit Recovery, Emphasizes Need for Detailed Adjudication

The Appellate Tribunal CESTAT MUMBAI set aside the impugned order regarding the recovery of regular credit and related issues, remanding the matter for ... Reversal of CENVAT Credit - Penalty - Rule 6 of the Cenvat Credit Rules, 2004 - Held that: - The learned Counsel for the GPL argued that there are a number of High Court’s decision which have discussed the said decision of Hon'ble Supreme Court. Since in respect of the main issue regarding confirmation of the reversal of the credit itself, the Order-in-Original is not a speaking order, the issue regarding interest raised in the Revenue’s appeal cannot be decided - Appeal is disposed of. Issues:1. Liability of interest and penalty under Rule 15(2) of Cenvat Credit Rules, 2004.2. Failure to appropriate the CENVAT Credit reversal.3. Applicability of provisions of interest under Rule 14 of the Cenvat Credit Rules, 2004.4. Lack of findings in the Order-in-Original regarding confirmation of appropriation of the amount of CENVAT reversal.5. Whether the impugned order is a speaking order.Analysis:1. The case involved the liability of interest and penalty under Rule 15(2) of Cenvat Credit Rules, 2004. The Commissioner limited the decision to the determination of liability of interest and penalty. It was held that no interest is payable on erroneously availed CENVAT Credit if the same was not utilized. Additionally, in the absence of specific allegations regarding intention to evade duty, no penalty could be imposed under Rule 15(2) of the Cenvat Credit Rules read with Section 11AC of the Central Excise Act, 1944.2. The Revenue filed an appeal challenging the Commissioner's order on various grounds. They argued that the adjudicating authority failed to counter the points in the show-cause notice and did not appropriate the CENVAT Credit reversal amount. It was also contended that the Commissioner overlooked the decision of the Hon'ble Supreme Court and a relevant Circular. The Revenue further highlighted that the provisions of interest under Rule 14 of the Cenvat Credit Rules, 2004 should apply to the reversal of credit pertaining to the financial year 2011-12.3. During the arguments, it was noted that there were no findings in the Order-in-Original regarding the confirmation of appropriation of the CENVAT reversal amount. This lack of clarity rendered the impugned order as not being a speaking order. The Revenue referenced the decision of the Hon'ble Supreme Court in a specific case in their appeal grounds.4. The counsel for the appellant pointed out that several High Court decisions had discussed the Supreme Court's decision mentioned by the Revenue. Due to the absence of a speaking order on the confirmation of the credit reversal, the issue regarding interest raised in the Revenue's appeal could not be conclusively decided.5. Consequently, the impugned order was set aside concerning the recovery of regular credit and related issues raised in the appeal grounds. The matter was remanded for fresh adjudication specifically on the limited issues raised by the Revenue in their appeal. The Cross-objection was also disposed of during the proceedings.This detailed analysis encapsulates the key issues and the subsequent legal arguments and decisions made in the judgment by the Appellate Tribunal CESTAT MUMBAI.