2001 (2) TMI 468 - AT - Central Excise

CEGAT Appellate Tribunal rules penalty increase illegal in remand proceeding. Commissioner disputes Rs. 7 lakhs payment. Duty

The Appellate Tribunal CEGAT, New Delhi ruled the penalty increase in a remand proceeding as illegal. The appellant contended full payment, disputed by ... Prohibition on increasing penalty in remand proceedings - Duty demand vs. admitted payments - Stay of recovery and pre-deposit requirementProhibition on increasing penalty in remand proceedings - Whether the Commissioner could enhance the penalty while deciding the matter on remand from the Tribunal. - HELD THAT: - The Tribunal held that when a matter is remanded to the Commissioner pursuant to the assessee's appeal, the Commissioner is not permissible to increase the penalty beyond what was imposed in the adjudication order remanded by the Tribunal. The order increasing the penalty from the previously imposed amount to a substantially higher sum was characterised as illegal. The Court accepted the appellant's submission that enhancement of penalty in remand proceedings was not allowable and set aside that part of the adjudication order. [Paras 2]The increase of penalty by the Commissioner in the remand proceedings is illegal and set aside.Duty demand vs. admitted payments - Whether the demand for duty was justified in view of the assessee's contention that the entire amount had been paid and a part had not been accounted for by the Commissioner. - HELD THAT: - The Tribunal recorded the appellant's claim that payments totalling the duty liability had been made and that approximately Rs. 7 lakhs had not been taken into account by the Commissioner. The Tribunal found that this contention required examination and directed that the question of whether the Commissioner failed to credit the payments claimed by the assessee must be gone into on remand. Thus, the issue of accounting for admitted payments was not finally decided on the merits but remitted for verification. [Paras 2]The question of whether the Commissioner failed to account for the payments claimed by the assessee is remanded for fresh consideration.Stay of recovery and pre-deposit requirement - Whether the appellant should be directed to make any pre-deposit or whether recoveries of duty and penalty should be stayed pending further hearing. - HELD THAT: - Having found the enhancement of penalty illegal and identified a disputed claim of admitted payments, the Tribunal exercised its discretion not to direct any pre-deposit by the appellant. The Tribunal accepted the appellant's stay application, observed no justification for directing pre-deposit of duty or penalty in the circumstances, and ordered that recoveries of duty and penalty be stayed until further hearing. [Paras 2]Stay application accepted; recoveries of duty and penalty stayed and no pre-deposit directed.Final Conclusion: The Tribunal set aside the part of the adjudication order enhancing the penalty on remand, remanded the issue of alleged unrecorded payments for verification, and granted stay of recoveries without directing any pre-deposit pending further hearing. The Appellate Tribunal CEGAT, New Delhi found the penalty increase in a remand proceeding to be illegal. The appellant claimed to have paid the entire amount, but the Commissioner did not consider about Rs. 7 lakhs. The tribunal stayed the recovery of duty and penalty, with the matter scheduled for further hearing on 5th March, 2001.