2009 (3) TMI 658 - AT - Central Excise

Summary

Issues involved:
The issues involved in this case include the imposition of penalty under Section 11A of the Central Excise Act, 1944, failure to comply with mandatory requirements of Notification No. 5/1999, and the proper utilization of input materials by the consumer.

Imposition of Penalty under Section 11A:
The appeal arose from an order confirming a demand against the respondent under Section 11A of the Central Excise Act, 1944. The Additional Commissioner had directed the payment of interest and penalties under Rule 173Q and Section 11AC of the Act. The Commissioner (Appeals) set aside the penalty, leading to a dispute regarding the grounds for setting it aside.

Failure to Comply with Mandatory Requirements:
The Departmental Representative argued that the respondent failed to comply with the mandatory requirement of Notification No. 5/1999, which was necessary to avail the exemption from Excise duty. The respondent did not fulfill the condition of producing a certificate from the authorized officer of the society at the time of clearance, as required by the notification.

Proper Utilization of Input Materials:
The Commissioner (Appeals) set aside the penalty based on the reasoning that the supplier should not be penalized for the consumer's failure to properly utilize the input materials. However, it was argued that this finding was not justified as the penalty was imposed due to the manufacturer's failure to comply with the pre-condition under the notification, and the appellate authority's interference was deemed extraneous to the records.

Decision and Ruling:
The Tribunal set aside the Commissioner (Appeals)'s order and restored the order passed by the lower authority, emphasizing the lack of bona fide in claiming benefits under the notification for products not covered by it. The ruling in the case of Commissioner of Central Excise, Indore v. Deepak Spinners Ltd. was cited as applicable to the facts of this case.

This summary highlights the key issues and details of the judgment, including the imposition of penalties, failure to comply with mandatory requirements, and the proper utilization of input materials, leading to the decision to set aside the Commissioner (Appeals)'s order and restore the lower authority's order.