2007 (7) TMI 679 - AT - Central Excise

100% EOU - benefit of Section 4(4)(d)(ii) of the Central Excise Act - Held that - the ld. Commissioner demanded a higher amount of duty even after accepting the assessee s worksheet wherein an amount of ₹ 9,00,760.63 was mentioned as outstanding duty. No amount of duty over and above the amount stated in the assessee s worksheet should have been demanded. This error can be corrected by the Commissioner. A composite penalty was imposed under different penal provisions which worked on different principles - Considerations relevant to imposition of penalty under Section 11AC are different from those relevant to imposition of one under Rule 173Q. Ld. Commissioner lost sight of this distinction. This error also can be corrected by him. Matter remanded for the limited purpose of re-quantification of the demand of duty on the basis of the assessee s worksheet - appeal allowed by way of remand.

Summary

Issues:
1. Benefit of Section 4(4)(d)(ii) of the Central Excise Act
2. Demand of duty and penalty imposed on the assessee
3. Imposition of penalty under different provisions
4. Correctness of the Commissioner's decision on duty and penalty

Analysis:

Issue 1: Benefit of Section 4(4)(d)(ii) of the Central Excise Act
The appeal involved a dispute regarding the benefit of Section 4(4)(d)(ii) of the Central Excise Act granted to the assessee. The Revenue contended that the adjudicating authority erred in allowing this benefit while computing the duty demand. The Revenue's appeal was dismissed, affirming the benefit granted to the assessee under Section 4(4)(d)(ii).

Issue 2: Demand of duty and penalty imposed on the assessee
The Commissioner demanded a duty amount higher than what was mentioned in the assessee's worksheet, leading to a discrepancy. The Tribunal noted that the Commissioner should have demanded only the amount stated in the worksheet. Regarding the penalty, the Commissioner imposed a penalty equal to the duty without considering that Section 11AC was not applicable for a significant part of the dispute period. The Tribunal remanded the case for re-quantification of the duty demand based on the assessee's worksheet and a fresh decision on the penalty imposition.

Issue 3: Imposition of penalty under different provisions
The Commissioner imposed a composite penalty under various provisions without providing a breakdown. The Tribunal highlighted that penalties under different provisions operate on distinct principles, and the Commissioner erred in not distinguishing between them. The Tribunal directed a re-evaluation of the penalty amount, ensuring a reasonable determination after considering relevant factors and providing the assessee with a fair opportunity to present their case.

Issue 4: Correctness of the Commissioner's decision on duty and penalty
The Tribunal found errors in the Commissioner's decision regarding both the duty demand and penalty imposition. The Commissioner was instructed to rectify the duty demand discrepancy by considering only the amount specified in the assessee's worksheet. Additionally, the penalty imposition was deemed inappropriate due to the incorrect application of penalty provisions. The Tribunal ordered a reassessment of the penalty amount, emphasizing a fair and reasoned approach in determining the penalty after reevaluation.

In conclusion, the appellate tribunal addressed the issues raised by both the assessee and the Revenue, providing detailed analysis and directions for the re-quantification of duty demand and penalty imposition, ensuring a fair and lawful resolution of the dispute.