2019 (5) TMI 588 - HC - Central Excise

High Court Overturns Tribunal Order on Central Excise Act Penalty Remand

The High Court set aside the order of the Tribunal under the Central Excise Act, which remanded the issue of penalty without recording findings on the ... Levy of penalty - CENVAT Credit - Tribunal while allowing the appeal of the respondent, the issue of eligibility CENVAT credit to the respondent was remanded for fresh consideration - HELD THAT:- Tribunal is the fact finding authority under the Act and is required to deal both with the question of fact and law. The Tribunal should not as a matter of course remand the issues before it to the Adjudicating Authority, unless investigation into facts is required and this can be best carried out by the Adjudicating Authority. In the present case, the impugned order only records certain decisions and proceeds to conclude that the said decisions were not considered by the Adjudicating Authority and therefore, the issue of eligibility of CENVAT credit was remanded to the Adjudicating Authority. In the appeal before the Tribunal, there were no fresh issues of facts which were required to be investigated. In fact there was no dispute on facts. The impugned order of the Tribunal while remanding the matter does not give any reasons to support its remand i.e. why it cannot adjudicate upon the matter on the basis of the material on record. Further, the impugned order deleted the penalty when the issue on merits is remanded to the Adjudicating Authority. This manner of dealing with an appeal is a classic case of putting the cart before the horse. The impugned order dated 21st July 2017 passed by the Tribunal is set aside - Appeal of the respondent is restored to the Tribunal for passing the fresh order in accordance with law. Issues involved:Challenge to order of the Customs, Excise and Service Tax Appellate Tribunal under section 35G of the Central Excise Act regarding penalty remand without recording findings on merits.Analysis:1. The appeal challenges the order passed by the Tribunal under the Central Excise Act. The High Court admitted the appeal and framed a substantial question of law regarding the Tribunal's decision to set aside the penalty without recording findings on the merits of the case.2. The High Court considered the nature of the question and decided to dispose of the appeal immediately. Despite the respondent being served notice, no appearance was made on their behalf.3. The impugned order of the Tribunal remanded the issue of eligibility of CENVAT credit to the respondent for fresh consideration. However, the Tribunal also decided not to levy any penalty on the respondent without providing reasons for such a decision.4. The High Court noted that the Tribunal is responsible for fact-finding and should address both factual and legal aspects. Remanding issues to the Adjudicating Authority should only be done if further investigation into facts is necessary. In this case, the Tribunal failed to provide reasons for remanding the matter and deleting the penalty.5. The High Court found that the Tribunal did not have to remand the matter as there were no fresh issues of fact to investigate. The only question was the application of law to existing facts. Deleting the penalty while remanding the issue on merits was deemed inappropriate by the High Court.6. Consequently, the High Court set aside the impugned order of the Tribunal and restored the appeal of the respondent for fresh consideration in accordance with the law.7. The High Court answered the substantial question of law in favor of the appellant-revenue and against the respondent-assessee. The impugned order was set aside, and the appeal of the respondent was restored to the Tribunal for proper disposal.8. The appeal was disposed of accordingly, with the High Court providing detailed reasoning for its decision to set aside the Tribunal's order and restore the matter for fresh consideration.