COMMISSIONER OF CENTRAL EXCISE Vs. CENTURY RAYON

JUDGEMENT

(1.) This order of Tribunal challenges the order of the Tribunal dated 31st December, 2004 [2005 (191) E.L.T. 216 (Tribunal)]. It was admitted on the following substantial questions of law :

(2.) Though the order passed by this Court on 16th January, 2006 indicates that there is similar appeal being Central Excise Appeal No. 11 of 2002 together with which this appeal was to be heard, Registry has not placed the 2002 appeal on board and possibly because it is disposed of. Whether it is disposed of by any reasoned order or by a non-speaking one is not also clear to us.

(3.) We proceed on the footing that there is no contrary order of this Court on any identical issue. The above questions have been termed as substantial questions of law by Ms. Shah. She submits that the supplier of inputs to the present respondent assessee was M/s. Bharat Petroleum Corporation Limited. The assessee is in the business of textiles. One of the inputs and which was acquired was sulfur. M/s. BPCL supplied the sulfur by clearing that product or goods at nil rate of excise duty. That was classified as falling under Schedule Item No. 25.02 of the Central Excise Tariff. That classification was disputed by the Revenue and a show cause-cum-demand notice was issued to M/s. BPCL. That was adjudicated and the duty liability based on the classification recorded in the order-in-original was confirmed. That duty was paid up by M/s. BPCL. However, in the order in that behalf against M/s. BPCL, penalty was imposed under Rule 173Q of the Central Excise Rules, 1944. Ms. Shah submits that once such is the position and factually undisputed, then, the Cenvat credit availed of by the present assessee respondent before us, was not available. Ms. Shah relies on Rule 7(b) of the Cenvat Credit Rules, 2002. She submits that on the strength of the supplementary invoices issued by M/s. BPCL, Cenvat credit was availed of by the present assessee. However, that was without a disclosure that M/s. BPCL the supplier of the inputs was visited with the penalty under Rule 173Q. That would denote that the supplier M/s. BPCL cleared the goods with an intent to evade payment of duty. In these circumstances, the Cenvat credit availed of was liable to be reversed and that is how the show cause-cum-demand notice to the assessee was rightly confirmed. The Tribunal has interfered with the same erroneously. The Tribunal proceeds on the footing that in the orders passed on adjudication and against M/s. BPCL, there is no finding that M/s. BPCL had made any wilful misstatement or suppressed facts or contravened any provisions of the Act or Rules thereunder with intent to evade payment of duty. In the circumstances, the Tribunal's order suffers from non-application of mind and should be set aside.