2017 (10) TMI 1052 - HC - Central Excise

Successful appeal emphasizes importance of reversing credit before using exempted goods to avoid penalties

The appeal before the Customs, Excise and Service Tax Appellate Tribunal, West Zonal Bench, Mumbai was successful, with the Tribunal emphasizing the ... Maintainability of appeal - substantial question of law - reversal of credit alongwith interest - Held that: - A finding of fact recorded by the Appellate Tribunal is that not only that there was reversal of credit, but the respondent paid interest of ₹ 4,71,189/. On this ground, the order of the Commissioner imposing penalty has been set aside. Today, the learned counsel for the appellant is not in a position to substantiate the challenge by the appellant to the factual finding - no substantial question of law arises - appeal dismissed being not maintainable. Issues:- Confirmation of demand and penalty by Commissioner, Central Excise, Pune-II- Appeal before Customs, Excise and Service Tax Appellate Tribunal, West Zonal Bench, Mumbai- Reversal of credit and payment of interest by respondent- Factual finding by the Appellate Tribunal in paragraph 8- Challenge to the factual finding- Dismissal of the appealConfirmation of Demand and Penalty:The Commissioner, Central Excise, Pune-II confirmed the demand and imposed a penalty on the respondent based on a show cause notice. This action led to the respondent appealing before the Customs, Excise and Service Tax Appellate Tribunal, West Zonal Bench, Mumbai.Appeal Before Tribunal:The respondent's appeal before the Appellate Tribunal was successful, as noted in the impugned judgment and order dated 31st March 2009. The Tribunal emphasized the importance of reversing credit before utilization and clearance of exempted goods to avoid penalties. The Tribunal highlighted that the appellant had not only reversed the credit but also paid interest, leading to the conclusion that the act of taking/utilizing the credit was undone.Reversal of Credit and Payment of Interest:The Appellate Tribunal's factual finding in paragraph 8 stated that the respondent had indeed reversed the credit and paid interest amounting to Rs. 4,71,189. This finding was crucial in setting aside the penalty imposed by the Commissioner.Challenge to Factual Finding:During the appeal hearing, the appellant's counsel initially disputed the reversal of credit by the respondent. However, it was later accepted that the reversal had been made albeit belatedly. The appellant could not substantiate the challenge to the factual finding recorded by the Tribunal in paragraph 8.Dismissal of the Appeal:The High Court, upon review, found that there was no substantial question of law to consider. Given the factual findings and lack of merit in the appeal, it was dismissed. The Court concluded that the reversal of credit and payment of interest by the respondent supported the decision to set aside the penalty imposed by the Commissioner.