CEA No.89 of 2008 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. C.E.A.No.89 of 2008 (O&M) Date of decision: 24.8.2010 Commissioner of Central Excise Commissionerate, Ludhiana -----Appellant Vs. M/s Markfed HDPE Sacks Plant, Anandpur Sahib, District Ropar (Punjab) ----Respondent CORAM:- HON'BLE MR JUSTICE ADARSH KUMAR GOEL HON’BLE MR. JUSTICE AJAY KUMAR MITTAL Present:- Mr. Sanjeev Kaushik, Central Government counsel for the revenue. Ms. Sushma Chopra, Advocate for the respondent. Adarsh Kumar Goel,J. 1. This appeal has been preferred by the revenue under section 35G of the Central Excise Act, 1944 (1944 Act) against order dated 11.7.2007 passed by the Customs, Excise & Service Tax Appellate Tribunal, New Delhi, proposing to raise following substantial questions of law:- i) Whether the reduction in penalty imposed by the Adjudicating Authority under Section 11AC of the Central Excise Act, 1944 is justifiable by the learned CESTAT when the demand confirmed has been upheld? ii) Whether the learned CESTAT is justifiable in reducing the penalty against section 11AC when the demand has been confirmed? 1 CEA No.89 of 2008 2. The respondent is a cooperative society under the provisions of the Punjab Cooperative Societies Act, 1961 (1961 Act). It is engaged in marketing of agricultural produce and for that purpose, it is manufacturing woven bags etc. It availed CENVAT credit for the excise duty paid while purchasing the goods. The department raised an objection that for the goods purchased for repair purposes, CENVAT credit was not admissible. Demand was accordingly raised which was upheld by the Tribunal. Apart from the demand of duty, equal amount of penalty was also imposed under section 11AC of the Act. On appeal, the amount of penalty was reduced to Rs.1 lac which has been put in issue in this appeal. 3. We have heard learned counsel for the parties and perused the record. 4. Only contention which has been raised on behalf of the appellant is that under section 11AC of the Act, penalty could not be less than 100%. 5. Learned counsel for the respondent assessee states that there was no case for penalty as there was no concealment and it was only raising a debatable issue about admissibility of input credit. 6. We find from the order of the Tribunal that there is no finding of concealment on the part of the assessee. Once there is a finding that the matter falls under section 11AC of the Act, penalty had to be minimum. In absence of finding to that effect, penalty was not justified. This being the position, there is an error in the order of the Tribunal and penalty could be justified only if the case falls under 2 CEA No.89 of 2008 Section 11AC of the Act. If the case falls under section 11AC, penalty had to be at the rate mentioned therein. 7. In view of above, there being patent error in the order of the Tribunal, the order to the extent of reducing penalty to Rs.1 lac is set aside. The matter is remanded to the Tribunal for fresh decision on merits on the issue of penalty in accordance with law. The parties will appear for further proceedings before the Tribunal on 20.12.2010. 8. The appeal is disposed of. (Adarsh Kumar Goel) Judge August 24, 2010 (Ajay Kumar Mittal) ‘gs’ Judge 3