2011 (5) TMI 513 - AT - Central Excise

Penalty u/s 11AC - 100% EOU - Manufacture and export of Polyester Printed Fabrics - The Revenue contended that since the appellants have cleared the goods to DTA units, they were liable to penalty - Held that - The appellant had cleared the goods on payment of customs duty by themselves informing the authorities that another 100% EOU to whom the goods were initially cleared, has refused to accept the consignments - Decided in favour of assessee.

Summary

Issues:
1. Setting aside of penalty imposed by the Revenue.
2. Liability of the appellant for special excise duty and NCCD.
3. Imposition of penalty under Section 11AC.

Analysis:

1. Setting aside of penalty imposed by the Revenue:
The case involved the Revenue appealing against the order of the Commissioner (Appeals) setting aside the penalty imposed on the respondent. The appellant, a 100% EOU engaged in manufacturing and exporting Polyester Printed Fabrics, had cleared unutilized raw material to another EOU and a DTA unit. The Revenue contended that the appellant was liable to pay special excise duty and NCCD. However, the Tribunal noted that the appellant had informed the authorities about the situation when the recipient EOU refused to accept the goods, and the Commissioner (Appeals) had set aside the penalty based on these facts. The Tribunal upheld the decision, stating that no interference was warranted in this regard.

2. Liability of the appellant for special excise duty and NCCD:
The Revenue raised a demand for payment of special excise duty and NCCD in addition to customs duty on the goods cleared by the appellant. The demand was contested by the appellant but upheld by the Commissioner (Appeals). However, the Tribunal did not delve into the merits of this demand as there was no appeal by the respondents against its confirmation. The focus of the appeal was on the penalty imposed by the Revenue, not on the liability for special excise duty and NCCD.

3. Imposition of penalty under Section 11AC:
The Revenue argued that the appellant should be penalized for clearing goods to DTA units. The Tribunal observed that each case for penalty must be decided based on the specific facts of that case. In this instance, the appellant had cleared the goods after the recipient EOU refused them and had duly informed the authorities. The Tribunal agreed with the Commissioner (Appeals) that there was no suppression of facts and no sufficient grounds for imposing a penalty under Section 11AC. Therefore, the Tribunal rejected the Revenue's appeal against the setting aside of the penalty.

In conclusion, the Tribunal upheld the decision to set aside the penalty imposed by the Revenue, emphasizing that the appellant had acted transparently in informing the authorities about the situation regarding the clearance of goods. The liability for special excise duty and NCCD was not addressed in detail as the focus of the appeal was on the penalty issue under Section 11AC.