2010 (9) TMI 396 - HC - Central Excise

Demand and penalty Period of limitation appellant availed the benefit of exemption Notification No. 108/95-C.E - exemption to goods supplied to projects which are financed by the World Bank, the Asian Development Bank or any international organisation, subject to fulfillment of conditions - Japan Bank of International Co-operation was not an international organisation approved duly in terms of the explanation attached to Notification No. 108/95-C.E. was not readily forthcoming by any records to which the respondent had access - no suppression of facts - conditions precedent under Section 11AC for the purpose of levy of penalty are not satisfied - Tribunal justified in setting aside the penalty levied under Section 11AC of the Act as well as issuing the direction to recalculate the demand alongwith duty and interest by applying normal period of limitation

Summary

Issues:
1. Recalculation of demand of duty and interest under Section 11A(2) of the Central Excise Act, 1944.
2. Imposition of equal penalty under Section 11AC of the Central Excise Act, 1944.

Analysis:
1. The case involved a Tax Appeal filed by the Commissioner of Central Excise and Customs, Vapi, regarding the recalculation of demand of duty and interest under Section 11A(2) of the Central Excise Act, 1944. The respondent, engaged in the manufacture of electric wires and cables, supplied goods to MSEB and WBSEB under the benefit of exemption Notification No. 108/95-C.E. The dispute arose when a show-cause notice alleged that projects financed by the Japan Bank of International Co-operation did not qualify for duty-free goods under the said Notification. Despite producing exemption certificates from the authorities of MSEB and WBSEB, a demand of duty was confirmed against the respondent. The Tribunal, after considering the facts, set aside the penalty under Section 11AC and directed the recalculation of demand with duty and interest applying the normal period of limitation.

2. The second issue revolved around the imposition of an equal penalty under Section 11AC of the Central Excise Act, 1944. The Tribunal found that there was no suppression of facts by the respondent, thus the conditions for the levy of penalty under Section 11AC were not satisfied. Consequently, the Tribunal set aside the penalty and directed the recalculation of demand along with duty and interest by applying the normal period of limitation. Upon review, the High Court upheld the Tribunal's decision, stating that there was no infirmity in the order passed by the Tribunal. The Court concluded that no substantial question of law arose from the case, leading to the dismissal of the appeal.

This detailed analysis highlights the key legal issues, arguments presented, and the final decision rendered by the High Court in the Tax Appeal case.