2003 (11) TMI 381 - AT - Central Excise

Summary

Issues:
Challenge against penalty imposition and duty confirmation by Commissioner (Adjudication) under Central Excise Act.

Analysis:
The case involved an appeal by the assessee against the penalty imposed by the Commissioner (Adjudication) amounting to Rs. 41,21,321. The appellant, engaged in manufacturing materials handling equipment, paid duty on clearance at the factory gate. However, in cases of turnkey projects with escalation clauses, duty on escalation charges was paid after final settlement with customers. A show cause notice was issued for recovery of Rs. 41,21,321 under Section 11A(1) of the Central Excise Act, along with penalty under Section 11AC and interest under Section 11AB. The appellant argued that duty payment on escalation charges was not possible at clearance due to undetermined amounts, a practice accepted by the department for years. The Commissioner confirmed the demand and imposed penalties.

The appellant contended that there was no suppression of facts justifying penalty and interest. The Revenue alleged suppression regarding escalated values received, justifying penalty and interest. However, the Tribunal found no merit in the Revenue's argument. It noted that duty was payable at clearance, and the appellant did not suppress the contract details. As the contract included an escalation provision, there was no factual suppression. The Tribunal suggested provisional assessment for cases with escalation clauses to avoid limitation issues. Concluding that there was no suppression of facts, the Tribunal held the penalties under Section 11AC and interest under Section 11AB as unsustainable. Consequently, the penalties imposed on the appellants were set aside under Rule 209A of the Central Excise Rules, 1944. The appeals were allowed, overturning the impugned order to that extent.