2011 (3) TMI 771 - AT - Central Excise

Penalty - Classification list was earlier approved under Chapter 28 and the same was sought to be changed from Chapter 28 to Chapter 34 based upon the Chemical Examiner s report. there can be no mala fide on the part of the assessee thus inviting any penal action against them. As regards interest - assessee s claim of classification under Heading 2828.90 was being accepted by Revenue - subsequently, based upon the Chemical Examiner s report that proceedings were initiated against assessee - The provisions of Section 11AB as they existed during the relevant period - The same provided that confirmation of interest when the duty confirmed was based on the allegations and findings of suppression or mis-statement etc - Held that there was no fraud or suppression on the part of the assessee - Interest and penalty not leviable.

Summary

Issues:
Classification of product under Chapter Heading 2828.90 vs. 3402.90, Imposition of penalty, Confirmation of interest under Section 11AB of Central Excise Act, 1944.

Classification Issue:
The appeal was filed by the Revenue against the order of the Commissioner (Appeals) regarding the classification of the product "Ala Fabric Bleach" under Chapter Heading 2828.90 instead of 3402.90. The advocate for the respondent acknowledged that the product should be classified under Heading 3402.90. The dispute arose when the Revenue initiated proceedings based on the Chemical Examiner's report, leading to a demand for duty, interest, and penalty. The Deputy Commissioner's order confirming the duty was appealed by the assessee, and the Commissioner (Appeals) accepted the classification under Chapter 28, setting aside the Dy. Commissioner's order.

Penalty Imposition Issue:
The advocate for the respondent argued that there was no mala fide intention on the part of the assessee, thus penal action should not be taken against them. He contended that the interest confirmed under Section 11AB was not justified as there was no allegation of suppression or misstatement in the show cause notice, and the classification list was previously approved by the proper officer. Therefore, he requested the restoration of the Dy. Commissioner's order regarding duty confirmation and upholding the Commissioner (Appeals) decision on penalty and interest.

Interest Confirmation Issue:
The Tribunal considered the provisions of Section 11AB during the relevant period, which required interest confirmation when duty was based on allegations of suppression or misstatement. Since there was no evidence of fraud or suppression by the assessee, the confirmation of interest under Section 11AB was deemed unnecessary. Citing precedents, the Tribunal concluded that interest is not leviable in the absence of fraud, suppression, or misstatement. Consequently, the appeal was allowed concerning the classification under 3402.90 and duty confirmation, while the penalty and interest imposed on the respondent were not upheld.

In conclusion, the Revenue's appeal was disposed of with the classification of the product under Heading 3402.90 upheld, the duty confirmed, but the penalty and interest were not sustained based on the absence of mala fide intent and the legal interpretation of Section 11AB regarding interest leviability.