CEA No.157 of 2006 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. Date of Decision:- 8.4.2010 M/s Indian Oil Corporation Ltd. ...Appellant Versus Commissioner, Central Excise, Rohtak ...Respondent CORAM: HON'BLE MR.JUSTICE ASHUTOSH MOHUNTA HON'BLE MR.JUSTICE MEHINDER SINGH SULLAR Present:- Mr.M.P.Devnath, Advocate for the appellant. Mr.Sanjeev Kaushik, Advocate for the respondent. Ashutosh Mohunta, J. (Oral) The appellant-assessee has filed the instant appeal impugning the order dated 24.2.2006 passed by the Customs, Excise and Service Tax Appellate Tribunal, vide which, the Modvat credit was denied to it (assessee) on the ground that the electricity produced by it was captively used for the plant as well as in the residential area of the refinery. The assessee was also directed to pay the penalty of Rs.15 lacs. The assessee is engaged in manufacture and sale of different petroleum products, generating and consuming the electricity in its residential colony under notification No.67/95-CE dated 16.3.1995. It claimed the modvat credit on the raw material of low sulphur heavy stock of residual fuel oil during manufacture of petroleum products and consumed captively. This credit was denied as the electricity was used in the residential colony of the Refinery. The Assessing Authority imposed the duty and penalty on the assessee, which was confirmed by the Commissioner (Appeals) and on appeal before the Appellate Tribunal, the penalty was reduced to Rs.15 lacs by placing reliance on the case of Bharat Heavy Electricity Ltd. v. Union of India reported as 1998 (99) E.L.T. 33. While admitting the present appeal, the following substantial questions of law arise for consideration by this Court:- (a) Whether the Tribunal was justified in invoking extended period of limitation when the department was aware of the fact that CEA No.157 of 2006 2 the appellants were availing the benefit of Notification No.67/95-CE? (b) Whether the Tribunal was justified in imposing penalty under Rule 173Q read with Section 11AC of the Central Excise Act, 1944 where there was no intention to evade the payment of duty? (c) Whether the Tribunal was justified in not setting aside the entire penalty as the appellant is a public sector undertaking and there cannot be any intention to evade Central Excise duty? Learned counsel for the assessee submitted that in this case, no penalty is leviable, in view of the judgment of Hon'ble Supreme Court in case Maruti Suzuki Ltd. v. Commissioner of Central Excise, Delhi-III 2009 (240) E.L.T. 641 (S.C.). Learned counsel for the revenue, however, submits that the Tribunal has rightly imposed the penalty and in fact the assessee is liable to pay the penalty equivalent to confirmed duty. After hearing the learned counsel for the parties, we are of the considered view that the assessee is not entitled to avail the Cenvat credit to the extent of excess electricity consumed in the residential area of the Refinery. However, as far as the penalty is concerned, it has been observed by the Apex Court in para 21 in Maruti Suzuki Ltd.'s case (supra) as under:- “Before concluding, it may be clarified that on account of repeated amendments in the CENVAT Credit Rules; huge litigation in the country stands generated. In the circumstances, we are of the view that penalty is not leviable on appellant/assessee, particularly when in large number of other cases, on account of conflict of views expressed by various Tribunals/High Court, the assessees have also succeeded. Hence, although M/s Maruti Suzuki Ltd. (appellant) has failed in their civil appeals, the Department will not impose penalty.” In view of the above, question (a) is decided against the assessee, being not pressed, whereas questions (b) and © are decided in favour of the assessee and against the revenue. No penalty is imposable on the assessee, in view of the facts of CEA No.157 of 2006 3 this case as there was no fraud committed by it. The aforementioned observations made by the Hon'ble Supreme Court in Maruti Suzuki Ltd.'s case (supra) also come to the rescue of the assessee. Resultantly, the instant appeal is partly allowed and the impugned orders passed by the authorities below are modified to the extent that no penalty shall be leviable from the assessee. (Ashutosh Mohunta) Judge (Mehinder Singh Sullar) Judge 8.4.2010 AS