Point of Law; CESTAT - Misstatement and Fraud – Proof of - without any conclusion having been reached as to intent to deceive, no finding of fraud could have been reached by CESTAT.

JUDGMENT :

Ujjal Bhuyan, J.

Heard Mr. Prasad Paranjape, learned counsel for the petitioner and Mr. Swapnil Bangur, learned counsel for the respondents.

2. This case was heard on 24.02.2021 where after the case was reserved for pronouncement of judgment on 15.03.2021. But as this Bench was not available from 15.03.2021, the case was listed on 12.03.2021 under the caption ‘for direction’. Since the matter was heard, the same was reserved for delivery of order on 12.03.2021.

3. By filing this petition under Article 226 of the Constitution of India, petitioner seeks quashing of order dated 28.08.2019 passed by the Customs, Excise and Service Tax Appellate Tribunal, West Zonal Bench, Mumbai (CESTAT) rejecting the Miscellaneous Application filed by the petitioner. Be it stated that in the appeal filed by the petitioner before CESTAT being appeal No.E/85319/2018, CESTAT vide order dated 27.09.2018 had held that petitioner had made mis-statement and thus practised fraud; therefore the appeal filed by the petitioner was dismissed. It was for recalling of finding of mis-statement or of fraud by CESTAT in the order dated 27.09.2018 that miscellaneous application was so filed by the petitioner which was not only dismissed by CESTAT vide the impugned order dated 28.08.2019 but it also imposed cost of Rs.10,000.00 on the petitioner.

4. Case of the petitioner as pleaded is that it is a company incorporated under the Companies Act, 1956 engaged in the business of manufacturing multi-layered plastic flexible laminated collapsible tubes and multi-layered plastic flexible laminated web classifiable under Chapter 39 of the First Schedule to the Central Excise Tariff Act, 1985. In the course of excise audit of the petitioner’s record carried out during February, 2013 for the period from October, 2010 to September, 2012, the auditors took the view that petitioner had availed ineligible credit of service tax paid on certain input services on the strength of documents not covered under Rule 9(2) of the CENVAT Credit Rules, 2004 (briefly ‘the CENVAT Credit Rules’ hereinafter). This led to issuance of show cause-cum-demand notice dated 23.12.2015 by the Joint Commissioner of Central Excise, Thane-1 Commissionerate. Amongst other allegations made it was alleged that petitioner had availed wrongful credit of service tax amounting to Rs.36,224.00 for the period from October, 2011 to July, 2012 in respect of labour services used for civil work, shifting of machinery, etc. It was alleged that as the services for which CENVAT credit was availed of was not connected with manufacturing activities of the petitioner, the same could not be termed as input service and hence not admissible.

5. Petitioner replied to the show cause-cum-demand notice on 16.03.2016. In so far the above allegation was concerned, petitioner contended that the credit taken by the petitioner on the disputed labour charges was correctly availed of by the petitioner. A personal hearing was also granted to the petitioner on 16.02.2017.

6. By the order-in-original dated 24.03.2017 passed by the Assistant Commissioner of Central Excise, out of Rs.36,224.00 allegedly wrongly availed of by the petitioner as service tax credit in respect of labour services, adjudicating authority held that petitioner was eligible for CENVAT credit of service tax in respect of three payments i.e., Rs.494.00, Rs.968.00 and Rs.5212.00. Thus, it was held that an amount of Rs.6674.00 was the admissible CENVAT credit out of the claim of the petitioner of Rs.36,224.00 making Rs.29,550.00 as inadmissible CENVAT credit. By the order-in-original, the adjudicating authority also imposed penalty of Rs.4,61,048.00 on the petitioner in addition to levy of interest.

7. Aggrieved by the said order-in-original, petitioner preferred appeal before the Commissioner (Appeals) to the extent the order-inoriginal was adverse to the petitioner. By the order-in-appeal dated 30.10.2017, Commissioner (Appeals) upheld the order of the adjudicating au