Issue on Penalties u/s 11AC of Central Excise Act Fails to decide based on decision by Supreme Court on same issue: CESTAT directs Re adjudication [Read Order]

The Mumbai bench of the Customs, Excise And Service Tax Appellate Tribunal ( CESTAT ) directed the readjudication on the issue of penalties imposed under section 11AC of Central Excise Act in light of decision by Supreme Court on Same Issue.

M/s Patodia Glass Industries Ltd, the appellant challenged the order  of Commissioner of Central Excise, Pune – IV for directing recovery of ₹ 3,23,60,884/- under section 11A of Central Excise Act, 1944, along with appropriate interest under section 11AB of Central Excise Act, 1944, and penalties under section 11AC for part of the period under dispute and at 50% for the remaining period as penalty, is the displacing of the classification adopted by the appellant for the period from November 2009 to August 2014 to apply rate of duty corresponding to tariff item 8539 2940 of Schedule to Central Excise Tariff Act, 1985 and consequent denial of concessional rate of duty.

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Counsel for the appellant submitted that the issue in dispute is squarely covered by the decision of the Tribunal in Alwar Lamps Pvt Ltd v. Commissioner of Central Excise, Jaipur [2004] which was upheld by the  Supreme Court in Commissioner of Central Excise, Jaipur v. Alwar Lamps Pvt Ltd [2015 ]. 

The appellant claimed that the issue stands resolved by the decision of the Supreme Court in re Alwar Lamps Pvt Ltd .  The said decision was issued around the time when the impugned order was passed and consequently rendered, without the benefit of that resolution. 

The two member bench of C J Mathew, Member ( Technical ) And Ajay Sharma, Member ( Judicial )  viewed that nonetheless, the order of the Tribunal which, though carried to the Hon’ble Supreme Court by central excise authorities, had been decided in 2004 which was not placed before the adjudicating authority as binding precedent. 

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“It would be appropriate to remand the matter back to the original authority to decide the matter afresh on the basis of judicial determination that has since attained finality “, the Tribunal viewed and allowed the appeal by way of remand.

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