2021 (3) TMI 236

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....ainst the common order dated 05.01.2016 made in Final Order Nos.4001540020/2016 passed by the Customs, Excise & Service Tax Appellate Tribunal, South Zonal Bench, Chennai ['the Tribunal' for brevity]. 2. The appeals have been admitted on 12.04.2018 on the following substantial questions of law: "1. Whether the CESTAT is correct in reducing the penalty levied under Rule 15(1) of the CENVAT Credit Rules, 2004? 2. Whether the CESTAT is correct in reducing the penalty imposed under Rule 26(2) (i) & (ii) of the Central Excise Rules, 2002, when no discretion is provided in the said Rule? 3. Whether the CESTAT is correct in upholding the order of Adjudicating Authority and thereby holding that the ineligible C....

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....ned the factual position and we are of the clear view that the transaction is a 'circular transaction'. It may be a fact that the four entities, namely, M/s. Endeavour Industries Limited, M/s. Future Tech Industries Limited, M/s. Victoria Steel Enterprises Limited and M/s. Sujana Metal Products Limited though have availed credit, did not utilize the credit to discharge any of their liability. There is another entity, namely, M/s. Omnicron Bio-Genesis Industries Ltd., on which penalty of Rs. 2 lakhs was imposed by the original authority, but the Tribunal did not interfere with the said amount and no reduction was made. Therefore, the revenue has not preferred any appeal against the said assessee. It is no doubt true that the Tribunal....

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....dit to discharge their duty burden in respect of other transaction. But that cannot be the reason for reduction of the penalty, especially when the amount which was availed as credit remained with the five entities over a period of time until it was reversed. Apart from that, the Tribunal would say that there is no revenue loss because M/s.Sujana Metal Products Limited have reversed the credit, that can hardly be a mitigating factor for reduction of penalty on the five entities because those entities were well aware that the transaction was a 'circular transaction' and credit was availed on invoices without movement of goods. Therefore, the exercise of discretion by the Tribunal for reduction of penalty is perverse and unsustainable....