COMMR OF C EX Vs. CARRIER AIRCON LTD

JUDGEMENT

(1.) This petition filed under Article 226 of the Constitution prays for partial quashing of order dated 8-2-2005 (Annexure P.3) passed by the Custom and Central Excise Settlement Commission- respondent no. 2 (for brevity the Settlement Commission') granting immunity to the assessee-respondent no. 1 from payment of interest amounting to Rs. 7,16,775/-. Further prayer has been made for setting aside order dated 22-6- 2005 (Annexure P.5). dismissing the miscellaneous application seeking rectification of the order dated 8-2-2005.

(2.) Brief facts may first be noticed. The assesee-respondent no.1 is engaged in the manufacturing of Air Handling Units, Chillers and parts thereof falling under tariff heading 84 (84.15) of the 1st schedule to the Central Excise Tariff Act, 1985 (for brevity the 1985 Act') and is also registered with the Central Excise Department. It has been availing modvat/cenvat credit on various inputs and discharging the obligation of Excise duty on the final products cleared from the factory. On 11-2-2003, the officers of the Director General Central Excise Intelligence visited the factory premises of the assessee- respondent no. 1 and found that the Cenvat credit of Rs. 27,26,092/- was availed by the assessee-respondent no. 1 on the inputs which infact were written off on 31-12-2001. Thereafter, the assessee-respondent no. 1 on its own volition reversed the aforesaid, Cenvat credit vide PLA Entry No. 11 dated 15-7-2003. It paid interest amounting to Rs. 7,16,775/- at the stage of investigation.

(3.) The assessee-respondent no. 1 was issued a show cause notice on 20-1-2004 raising demand of Central Excise duty of Rs. 27,26,092/- in the Cenvat credit availed on inputs on 31-12-2002. It was proposed to impose penalty under Section 11AC of the Act read with Rule 25 of the Central Excise Rules, 2001 (for brevity the 2001 Rules'). The show cause notice also raised the demand of interest under Section 11AB of the Act read with Rule 12 of Cenvat Credit Rules, 2001 (for brevity the Cenvat Rules'). According to the show cause notice the assessee- respondent no. 1 was to show as to why the aforementioned amount be not appropriated to Cenvat credit/interest.