2008 (8) TMI 741 - AT - Central Excise

Summary

Issues:
- Demand of duty on RCC Poles
- Imposition of penalty under Rule 173Q of Central Excise Rules
- Liability to pay interest on duty demanded
- Wilful suppression by respondents
- Appeal for penalty imposition by Revenue
- Challenge on finding of wilful suppression
- Settlement of dispute on manufacturer of RCC Poles
- Bona fide belief of respondents
- Applicability of apex court judgments on penalty imposition
- Dismissal of Revenue's appeal

Analysis:

1. Demand of duty on RCC Poles:
The original authority demanded Rs. 5,94,566 due on RCC Poles manufactured and cleared by the respondents during a specific period to the State Electricity Board. The duty was imposed under the Central Excise Act, 1944.

2. Imposition of penalty under Rule 173Q of Central Excise Rules:
Along with the duty demand, an equal amount of penalty was imposed on the respondents under Rule 173Q of the Central Excise Rules, 1944, read with Section 11AC of the Central Excise Act, 1944.

3. Liability to pay interest on duty demanded:
The original authority also ordered that the respondents were liable to pay interest on the duty demanded in accordance with Section 11AB of the Central Excise Act.

4. Wilful suppression by respondents:
The Commissioner (Appeals) found no wilful suppression by the respondents in not paying the duty on the manufactured goods, leading to the imposition of the penalty.

5. Appeal for penalty imposition by Revenue:
In the appeal filed by the Revenue, the prayer was to impose penalty on the respondents, arguing that the penalty imposed by the original authority was correct due to the respondents' failure to register themselves.

6. Challenge on finding of wilful suppression:
The Revenue challenged the finding of the lower appellate authority that there was no wilful suppression of facts by the respondents. However, this finding was not contested in the appeal.

7. Settlement of dispute on manufacturer of RCC Poles:
A long-standing dispute on the manufacturer of RCC Poles was resolved by a judgment of the Honorable Supreme Court in a specific case, confirming the manufacturer when the State Electricity Board purchased goods from their contractors.

8. Bona fide belief of respondents:
The Commissioner found that the non-payment of duty was due to the respondents' bona fide belief that they were not liable to pay the demanded duty, which was considered well-founded.

9. Applicability of apex court judgments on penalty imposition:
Referring to apex court judgments, the Tribunal concluded that penalty should not be imposed in the absence of mens rea and in such circumstances, aligning with the principles established in previous judgments.

10. Dismissal of Revenue's appeal:
After careful consideration of the facts and legal precedents, the Tribunal dismissed the Revenue's appeal, finding no merit in the argument for penalty imposition, thereby upholding the Commissioner's decision.