2016 (10) TMI 1167 - AT - Central Excise

Benefit of N/N. 21/2002-Cus., dated 1-3-2002 - demand was raised and confirmed u/s 11A of the CEA, 1944 - Held that - Demand of duty is admittedly in respect of Customs duty and for violation of Customs provisions, the duty should have been proposed and confirmed under the provisions of Customs Act, 1962. Therefore, the demand confirmed under Section 11A of the Central Excise Act, 1944 will not sustain - appeal dismissed - decided against Revenue.

Summary

Issues Involved:
Admissibility of exemption Notification No. 21/2002-Cus. on imported goods, specifically Ketamine HCL.

Detailed Analysis:

1. Admissibility of Exemption Notification:
The appeal revolved around the admissibility of exemption Notification No. 21/2002-Cus. dated 1-3-2002 on the imported goods, Ketamine HCL. The jurisdictional Dy. Commissioner of Central Excise demanded duty under Section 11A of the Central Excise Act, 1944, and imposed penalties under the Central Excise Rules, 2002. The Commissioner (Appeals) allowed the appeal, stating that the demand should have been raised under Section 28 of the Customs Act, 1962, not under Section 11A of the Central Excise Act. The Revenue appealed against this decision.

2. Arguments by Revenue:
The Revenue, represented by the Asstt. Commissioner, contended that the duty was rightly demanded under Section 11A of the Central Excise Act due to the goods being imported in violation of Customs Rules. They argued that the demand should not have been set aside on the grounds of limitation, as the respondent had an obligation due to executing a bond for using the imported goods in manufacturing excisable goods. Reference was made to a Larger Bench decision in the case of Mumbai Hospital.

3. Arguments by Respondent:
On the other side, the respondent, represented by a Chartered Accountant, argued that the demand confirmed under Section 11A was not sustainable as it should have been proposed and confirmed under Section 28 of the Customs Act, 1962. They pointed out that the demand was based on non-compliance with rules, while a specific exemption under Part A Serial No. 80 applied to certain drugs. Citing a Supreme Court judgment, they emphasized that if entitled to benefits under different notifications, the more advantageous entry could be claimed.

4. Judgment and Analysis:
The Tribunal, after considering both sides' submissions, concluded that the demand confirmed under Section 11A of the Central Excise Act, 1944, for Customs duty violation was not sustainable. The Commissioner (Appeals) had correctly set aside the demand, citing that the demand should have been raised under Section 28 of the Customs Act, 1962. The Tribunal upheld the Commissioner's decision, emphasizing that the penalty imposed was not sustainable after the demand itself was held to be not payable. The appeal by the Revenue was dismissed, affirming the order of the Commissioner (Appeals).

In conclusion, the judgment focused on the correct application of statutory provisions regarding the demand for duty and penalties, highlighting the importance of adhering to the specific provisions of the Customs Act in such cases.