2018 (7) TMI 256 - AT - Central Excise

Revenue appeal dismissed, penalties set aside, matter remanded for verification

The appeal by Revenue against the order upholding duty demand but reducing penalty on M/s.S.L.B. Enterprises was dismissed. Cross Objections by ... Waiver of personal penalty of ₹ 5.00 Lakhs imposed u/r 26 of CER - Held that:- Inasmuch as the amount involved is less than ₹ 10.00 Lakhs, the appeals filed by the Revenue are hit by the litigation policy. - Revenue appeal dismissed. CENVAT credit - reversal of proportionate credit on the inputs used in the manufacture of exempted products - Held that:- Nothing is clear either in the original order or in the Order-in-Appeal. If the appellants have reversed the proportionate credit, there would be no further requirement to confirm the demand in terms of the provisions of Rule 6(3) of Cenvat Credit Rules - also the appellants have stated that the said goods were being exported by them in which case there would be no requirement of reversal of any amount. This fact is also not clear from the files - matter is remitted to the original adjudicating authority for examining the submissions of the appellant and to verify the records. Penalties on M/s.S.L.B. Enterprises - Held that:- Admittedly when the assessee took the credit, he was entitled to the same inasmuch as all their final products were dutiable. It is only w.e.f. 01.03.2008 that Menthol and Menthol Crystal became exempted and the dispute arose. In such a scenario no mala fide can be attributed to M/s.S.L.B. Enterprises so as to justifiably invoke penal provisions against them - penalty set aside. Appeal disposed off. Issues Involved:- Appeal against order passed by Commissioner(Appeals) by Revenue- Cross Objections filed by respondents- Challenge to penalty imposed on respondents- Enhancement of penalty by Revenue against M/s.S.L.B. Enterprises- Confirmation of demand against M/s.S.L.B. Enterprises- Imposition of penalty on M/s.S.L.B. Enterprises- Availing Cenvat credit by M/s.S.L.B. Enterprises- Exemption of Menthol and Menthol Crystals from duty- Reversal of credit proportionate to inputs used in manufacture of exempted products- Export of goods by appellants- Remand of the matter to original adjudicating authority- Setting aside penalties on M/s.S.L.B. EnterprisesAnalysis:1. The appeal was filed by the Revenue against the order passed by the Commissioner(Appeals), where the demand of duty against M/s.S.L.B. Enterprises was upheld but the penalty was reduced. The respondents also filed Cross Objections challenging the order. The Revenue's appeal against two individuals for setting aside penalties was dismissed under Litigation Policy due to the amount involved being less than a specified limit.2. The Revenue's appeal against M/s.S.L.B. Enterprises sought enhancement of penalty, while the company filed Cross Objections challenging the demand confirmation and penalty imposition. M/s.S.L.B. Enterprises were involved in the manufacture of dutiable products and availed Cenvat credit. However, post an exemption notification, duty-exempt goods were cleared without payment, leading to a demand and penalties.3. The appellants argued they had reversed credit proportionate to inputs used in exempted product manufacture. The Tribunal found ambiguity in the orders and remanded the matter to the original authority for verification. The penalties on M/s.S.L.B. Enterprises were set aside as no mala fide intent was found post the duty exemption change in 2008.4. The Tribunal concluded by disposing of all matters, setting aside penalties on M/s.S.L.B. Enterprises, and remanding certain issues for further examination. The decision was pronounced in open court on a specified date.