2005 (11) TMI 341 - AT - Central Excise

Summary

Issues:
- Appellant's liability for duty payment
- Applicability of exemption notification
- Interpretation of the exemption notification
- Imposition of penalty under Section 11AC
- Benefit of the first proviso to Section 11AC(1)

Analysis:

1. Appellant's liability for duty payment: During the material period, the appellants were found to have not paid duty on their processed tea. The Central Excise officers estimated the duty amount, leading to a subsequent payment by the appellant after an Order-in-Original was issued. The appeal was filed against the penalty imposed on the appellant.

2. Applicability of exemption notification: The appellant claimed that their non-payment of duty was due to a genuine belief in the availability of an exemption under Notification No. 41/99-CE. However, the Respondent argued that the conditions of the notification were clear, and the appellant's factory did not meet the required criteria for exemption during the relevant period.

3. Interpretation of the exemption notification: The Respondent contended that there was no ambiguity in the language of the notification, emphasizing that the factory needed to have been operational for at least 6 months preceding a specific date to qualify for the exemption. As the appellant's factory started operating just before the specified date, it did not fulfill the condition for exemption.

4. Imposition of penalty under Section 11AC: The Commissioner (Appeals) had reduced the penalty imposed on the appellant based on the first proviso to Section 11AC(1) of the Central Excise Act. This proviso allows for a penalty of 25% of the duty amount if paid within 30 days from the communication of the order. The appellant had paid a partial amount before the issuance of the Show Cause Notice and the remaining after the Order-in-Original.

5. Benefit of the first proviso to Section 11AC(1): The appellate authority upheld the penalty imposed on the appellant, considering the payment made after the Order-in-Original. The authority applied the first proviso to Section 11AC(1) and determined the penalty as 25% of the duty amount paid after the receipt of the Order-in-Original. The decision was based on the specific circumstances of the case and the provisions of the law.

In conclusion, the appellate tribunal affirmed the impugned order, dismissing the appeal and upholding the penalty imposed on the appellant for non-payment of duty, considering the provisions of the exemption notification and the application of the first proviso to Section 11AC(1) in determining the penalty amount.