2006 (8) TMI 492 - AT - Central Excise

Summary

Issues:
Penalties imposed under Rule 209A of the Central Excise Rules, 1944 for dealing with excisable goods knowing them to be liable to confiscation.

The judgment of the Appellate Tribunal CESTAT, Mumbai involved three appeals against penalties imposed on the appellants under Rule 209A of the Central Excise Rules, 1944. The penalties were imposed on the grounds of dealing with excisable goods, specifically ammonium nitrate, knowing them to be liable to confiscation due to quality improvement from inferior to higher purity for the production of explosives.

During the period in question, the Tribunal had previously held that improving the quality of ammonium nitrate by converting it to a higher purity did not amount to manufacture, as established in the case of CCE v. Anil Chemicals Pvt. Ltd. This view was later confirmed by a Larger Bench decision in the case of Supreme Chemicals v. CC, where it was determined that such conversion would attract Central Excise duty. However, this Larger Bench decision was made only on 7-6-2000, after the period in this case. Therefore, due to the existence of conflicting decisions and the subsequent resolution in 2000, the appellants were given the benefit of doubt regarding knowingly dealing with excisable goods liable to confiscation. As a result, the penalties imposed were set aside, and the appeals were allowed.

In conclusion, the judgment by the Appellate Tribunal CESTAT, Mumbai addressed the issue of penalties imposed under Rule 209A of the Central Excise Rules, 1944 for dealing with excisable goods known to be liable to confiscation. The decision highlighted the importance of the timing of legal interpretations and the benefit of doubt in cases where the excisability of goods was uncertain due to conflicting precedents, ultimately leading to the setting aside of the penalties in this case.