A.K. Construction vs CESTAT

Heard Ms. Akshada Thakre, Learned Counsel with Shri S.V. Purohit, Learned Counsel for appellant and Shri S.K. Mishra, learned A.S.G.I. for respondent No. 2. Looking to the nature of the controversy involved in the matter, service upon respondent No. 1 is dispensed with. Admit. Taken up for final hearing by consent.

Substantial question involved in this appeal is - Whether an order of penalty could have been passed against the appellant without setting aside the finding of absence of intention, recorded by the Assistant Commissioner of Central Excise in Paragraph No. 3.5 of the order-in-original?

Ms. Thakre, Learned Counsel points out that the said order was questioned before the Commissioner of Appeals and that Authority has decided the appeal on 10-11-2009 and rejected it. However, the finding of absence of intention or its impact has not been gone into. A further appeal u/s 86 of the Finance Act to Custom Excise and Service Tax Appellate Tribunal (CESTAT) has then been decided on 25-1-2011 [ 2011 (22) S.T.R. 445 ]. Though this aspect was pointed out, the CESTAT has only reduced the quantum of penalty from Rs. 200/- per day to Rs. 100/- per day.

Learned Counsel wishes to rely upon large number of judgments on the point of intention of evasion on penalty proceedings.

Learned A.S.G.I., is contending that the payment to assessee by the original employer M/s. Manikgarh Cement, is not in dispute and inspite of the said payment, the appellant assessee has not cleared the tax due within time. These facts are on record and cannot be disputed. According to him, in this situation, issuance of show cause notice, which only indicates non-payment, cannot clothe the appellant with any additional defence and payment before issuance of show cause notice has therefore, got no relevance.

We find that the Assistant Commissioner, Central Excise in his order-in-original has specifically found that the intention of evasion was not present in the matter. Whether this finding is right or wrong on facts and its relevance in penalty proceedings could have been looked into by the Commissioner Appeals, and thereafter by the CESTAT in further appeal. There is no effort by both these Authorities to consider the correctness of the finding or then its impact, in so far as the imposition of penalty or its quantum is concerned.

However, though learned ASGI is right in contending that necessary facts are on record, for the first time, when statute expects this Court to consider only the substantial question of law, we are not ready and willing to undertake the scrutiny into correctness or otherwise of the findings recorded by the Assistant Commissioner in his order-in-original.

The impugned order passed by the CESTAT on 25-1-2011 in Appeal No. ST/72/10-MUM is, therefore, quashed and set aside. The proceedings in said appeal are restored to the file of CESTAT, West Zone, Bench at Mumbai for its fresh consideration, in accordance with law. Parties are directed to appear before the said Tribunal on 10-1-2012. Appeal is thus partly allowed, with no order as to costs.