2010 (1) TMI 1069 - AT - Central Excise

Summary

Issues involved: Appeal against confirmation of penalties u/s 11AC and Rule 173Q, imposition of redemption fine in lieu of confiscation of goods.

Summary:
The appellant, engaged in manufacturing parts and accessories of Arms and Ammunition, filed an appeal against the confirmation of penalties and imposition of redemption fine. The appellant had not paid the special Central Excise Duty on clearances of final products, leading to duty demand, interest, penalty, and confiscation of goods. The appellant admitted duty liability but contested the penalties and redemption fine.

The appellant's advocate argued that confusion arose due to changes in Special Excise Duty rates announced in the Union Budget 2001-2002. The Budget specified that arms and ammunition for private use would attract 16% SED. The appellant, manufacturing exclusively for Defence establishments, faced additional liability due to lack of clarity in the SED Schedule. Despite representing the matter to the Finance Minister, the appellant paid the differential SED along with interest, emphasizing no intent to evade duty.

After considering the submissions, the Tribunal found that the appellant diligently discharged duty liability, citing confusion caused by the Budget speech. The appellant sought clarification and paid duty upon realization. Consequently, the Tribunal waived the penalties u/s 11AC and redemption fine, following a precedent where redemption fine cannot be imposed when goods are not available for confiscation. The appeal was allowed.