2010 (1) TMI 1078 - AT - Central Excise

Summary

Issues: Penalty under Section 11AC

Detailed Analysis:
The appeal was against the order of the Commissioner (Appeals) regarding the imposition of penalty under Section 11AC of the Central Excise Act, 1944. The appellant, a manufacturer of Horlicks, transferred the product in bulk condition to various packing stations for captive consumption. The duty was paid on a provisional basis during clearance based on the cost construction method. Subsequently, a differential duty was paid after discrepancies were found in the cost records related to inward freight on empty drums. The show cause notice proposed confirmation of duty, interest, and penalty under Section 11AC.

The original authority confirmed the duty demand, ordered interest recovery, and imposed a penalty under Section 11AC. The Commissioner (Appeals) upheld this decision. The appellant did not dispute the duty and interest but challenged the imposition of the penalty. The appellant argued that the omission regarding inward freight on empty drums in the CAS-4 statement was unintentional and rectified promptly upon identification. The appellant claimed it was a misunderstanding regarding the cost construction method and that the penalty was not warranted.

The Tribunal considered both sides' arguments and noted that the duty demand and interest were not in dispute. The key issue was whether the penalty under Section 11AC could be justified. The assessment was provisional and finalized based on information provided by the appellant. The Tribunal questioned the timing of the verification conducted after finalization and found no evidence of willful suppression by the appellant. The Tribunal acknowledged the appellant's plea that the duty paid on bulk Horlicks was available as credit to the packing stations and accepted that the omission of inward freight on empty drums was unintended.

Ultimately, the Tribunal concluded that there were no grounds to invoke the provisions of Section 11AC and allowed the appeal by setting aside the penalty imposed by the Commissioner (Appeals).

This detailed analysis of the judgment highlights the procedural history, arguments presented by both parties, the Tribunal's assessment of the facts, and the ultimate decision regarding the imposition of the penalty under Section 11AC.