2015 (4) TMI 1020 - AT - Central Excise

Penalty u/s 11AC - whether penalty under Section 11AC has been rightly imposed on the appellant in the fact that due to change in the warehousing provisions w.e.f. 6.9.2004 vide Notification No. 17/04-CE the appellants are having certain quantity of stock in the warehouse which was declared to the department on 6.9.2004 itself - Held that - Issue as to differential duty has been arisen in the facts of this case as a matter of interpretational issue. There is no concealment or contumacious conduct on part of the appellant found by the Revenue. Accordingly the penalty under Section 11AC read with Rule 25 of the Central Excise Rules 2002 is set aside. The appellant shall be liable to pay interest as held in the impugned order under Section 11AB and shall deposit the same if not paid so far - Decided partly in favour of assessee.

Summary

Issues involved:
1. Imposition of penalty under Section 11AC on the appellant due to changes in warehousing provisions.
2. Quantification of duty on unaccounted quantity of furnace oil and the differential duty allegedly short paid on cleared oil.
3. Applicability of penalty under Rule 25 of Central Excise Rules read with Section 11AC.
4. Interpretation of duty payment on ex-factory price versus warehouse price after withdrawal of warehousing permission.

Analysis:
1. The appellant, M/s Indian Oil Corporation Ltd., appealed against an order imposing penalty under Section 11AC by the Commissioner of Central Excise (Appeals), Raigad, regarding a change in warehousing provisions effective from 6.9.2004. The duty was paid by the appellant on 5.10.2004 after notifying the Revenue about stock in the warehouse. The Tribunal previously observed favorably for the appellant in similar cases, citing applicable notifications and court decisions.

2. The adjudicating authority quantified the duty not paid on an unaccounted quantity of furnace oil and the differential duty allegedly short paid on cleared oil. The Commissioner adjusted the duty amount based on the correct price applicable for charging Central Excise duty, leading to a revised duty liability for the appellant. The penalty under Rule 25 of Central Excise Rules read with Section 11AC was imposed along with interest under Section 11AB.

3. The appellant argued that the matter was interpretational, with no contumacious conduct or concealment, as they promptly informed the Revenue about stock changes and paid duty accordingly. The appellant contested the imposition of penalty, claiming it was unjustified. The appellant's view was supported by the fact that the issue was a matter of interpretation without any intentional wrongdoing.

4. After considering the arguments, the Tribunal found no concealment or contumacious conduct by the appellant. The penalty under Section 11AC was set aside, emphasizing that the issue was interpretational, and the appellant was liable to pay interest as per the impugned order. The appeal was allowed with consequential benefits as per the law, providing relief to the appellant.

Conclusion:
The judgment addressed the imposition of penalty under Section 11AC, quantification of duty on furnace oil, applicability of penalty under Rule 25 of Central Excise Rules, and the interpretation of duty payment post withdrawal of warehousing permission. The Tribunal ruled in favor of the appellant, setting aside the penalty while upholding the interest payment, thus granting relief in accordance with the law.