2007 (2) TMI 647 - AT - Central Excise

Summary

Issues involved: Appeal against Central Excise duty demand u/s 11A of Central Excise Act, 1944, denial of benefit of Notification No. 108/95-C.E., imposition of penalty.

Central Excise duty demand: The appellants manufactured transmission line towers supplied to M/s. Power Grid Corporation of India Ltd. without payment of duty u/s Notification No.108/95-C.E. However, a show cause notice was issued seeking duty payment as World Bank funding did not materialize. The Commissioner confirmed the duty demand of Rs. 9.35,96,447 u/s 11A of the Act, but allowed adjustments for amounts already deposited by M/s PGCIL and CVD paid by them. The remaining amount was to be paid by the appellants along with interest u/s 11AB. No penalty was imposed.

Benefit of Notification No. 108/95-C.E.: The appellants argued that they fulfilled the conditions of the Notification as World Bank funding was received later. They cited precedents where similar benefit was allowed post-clearance. The Commissioner acknowledged the World Bank funding received by M/s. Power Grid Corporation of India Ltd. in May 2004, fulfilling the conditions of the Notification. The absence of a specific time limit in the Notification to fulfill conditions was highlighted, leading to the appeal being allowed based on precedents from Bangalore and Mumbai Benches.

Imposition of penalty: The Commissioner refrained from imposing any penalty on the appellants, considering the genuine belief at the time of clearance that World Bank funding would be received, which was later vindicated. The entire project was under the aegis of the Government of India, Ministry of Power, further supporting the decision not to impose a penalty.

Conclusion: The appeal was allowed based on the fulfillment of conditions of Notification No. 108/95-C.E. post-clearance, in line with precedents from other benches, and the absence of a specific time limit in the Notification for fulfilling conditions. No penalty was imposed considering the genuine belief and subsequent receipt of World Bank funding.