Interest and Penalty against Cipla for incorrectly availed CENVAT Credit on Input Services dropped without a Speaking Order: CESTAT quashes Order [Read Order]

The Mumbai bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) quashed the order by the Commissioner since the interest and penalty against Cipla Ltd for incorrectly availed CENVAT credit on input services dropped without a speaking order.          

The Revenue challenged the order dated 22.06.2012 passed by the Commissioner(Appeals), Customs, which set aside the Adjudication Order and allowed the appeal filed by the assessee-respondent. 

The audit conducted by the Central Excise Audit noticed that out of the total Cenvat Credit availed by the respondent during the period,  they have wrongly availed Input Service Credit of Rs.24,45,094/- towards Service Tax paid on input services which were used in the manufacture of non-excisable goods and no separate accounts were maintained for input service credit availed on input services used for the manufacture of non-excisable goods.

The appellant failed to inform the department that separate accounts were not maintained in respect of Cenvat Credit of input service availed on input services used in the manufacture of excisable goods and non-excisable goods.

 The respondent accepted the discrepancy and reversed the amount of 24,45,094/- through their Cenvat credit account on 31.3.2008 but they failed to pay any interest on the aforesaid wrongly availed input service credit. A show cause cum demand notice was issued and also claimed interest along with penalty under rule 15 of the Central Excise Act, 1944  read with Section 11AC of the Central Excise Act, 1944. 

The Adjudicating Authority confirmed the demand raised in the show cause notice along with interest and penalty. On appeal, the Commissioner set aside the Order-in-Original.  

It was found that the impugned order has been passed most unusually and there was no reasoning given in the conclusion. There was neither any reasoning nor any finding that too while setting aside the reasoned order passed by the adjudicating authority. It was evident that the assessee’s appeal was allowed by way of non-speaking order and the entire adjudication order was set aside.

A two-member bench comprising Mr Ajay Sharma, Member (Judicial) and Mr Anil G. Shakkarwar, Member (Technical) set aside the impugned order and remand the matter back to the Commissioner (Appeals) for fresh disposal on its own merits by law after giving reasonable opportunity of hearing to both the side and by giving reasoning/findings while arriving at any conclusion in the appeal filed by the assessee. 

To Read the full text of the Order CLICK HERE

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