2011 (2) TMI 1066 - AT - Central Excise

Penalty - appellants has suppressed the production of products - Held that - Merits in the assessee submission, as to if the clearances made by them availing the benefit of SSI Notification for the branded goods is to be considered as full duty paid clearances, then he is eligible for exemption for his own products to extent of value of goods cleared on full payment of duty. This aspect has not been considered by the lower authorities in their impugned orders - remand the matter back to the adjudicating authority to reconsider the issue afresh.

Summary

Issues:
1. Imposition of penalty and interest under Section 11AC and 11AB.
2. Eligibility for exemption based on full duty payment for goods claimed under SSI Notification.

Analysis:
1. The Revenue appealed against Order-in-Appeal No. PD/18/TH-I/2003, arguing that the Commissioner (Appeals) did not impose equivalent penalty and interest under Section 11AC and 11AB. The Revenue contended that despite suppression of production, the penalty and interest were set aside because the duty was paid before the show-cause notice, which was deemed against settled law as per the Supreme Court's ruling in Rajasthan Spinning & Weaving Mills 2009 (230) ELT 3. The Tribunal found that the Commissioner rightly invoked the proviso to Section 11A of the Central Excise Act, 1944. However, the Tribunal noted that the lower authorities did not consider the aspect of clearances made by the assessee under the SSI Notification for branded goods, which could qualify as full duty paid clearances, making the assessee eligible for exemption. Therefore, the Tribunal remanded the matter back to the adjudicating authority for a fresh consideration, emphasizing the need to follow the principles of natural justice.

2. The assessee, despite being absent, filed a written submission claiming eligibility for exemption based on the exclusion of the amount of clearances from the aggregate value, as full duty was paid for the goods claimed under the SSI Notification. The Tribunal acknowledged the merit in the assessee's submission and directed the adjudicating authority to reconsider the issue afresh, emphasizing the importance of evaluating whether the clearances made by the assessee for branded goods could be considered as full duty paid clearances, thus entitling the assessee to exemption for their own products to the extent of the value of goods cleared on full payment of duty. The Tribunal highlighted the need for a comprehensive reassessment of the issue to ensure a just and fair conclusion based on the principles of natural justice.

In conclusion, the Tribunal's judgment focused on the proper imposition of penalties and interest under Section 11AC and 11AB, as well as the eligibility of the assessee for exemption based on full duty payment for goods claimed under the SSI Notification. The Tribunal emphasized the importance of considering all relevant aspects and remanded the matter back to the adjudicating authority for a thorough reconsideration, stressing the adherence to principles of natural justice throughout the process.