2011 (4) TMI 1133 - AT - Central Excise

Penalty - classification - authorized person of the assessee had accepted the liability and debited the duty as soon as the same were informed Held that - Commissioner (Appeals) was justified in not imposing the penalty under Section 11AC of the Central Excise Act, 1944 taking note of the fact that the respondents paid duty voluntarily, no merit in the appeal filed by the Revenue hence rejected

Summary

Issues: Classification of Gear Box Assembly and Clutch Assembly under CETH 8483 or CETH 8432, Imposition of penalty under Section 11AC

Classification Issue:
The case involved a dispute regarding the classification of Gear Box Assembly and Clutch Assembly manufactured by the respondents. The Revenue contended that these items should be classified under CETH 8483, while the respondents claimed classification under CETH 8432. The Commissioner (Appeals) had confirmed the classification under CETH 8483, leading to an appeal before the Appellate Tribunal. The Tribunal analyzed the relevant Chapter heading 8483, which included gears and gearing, and concluded that since the respondents purchased Gears and Clutches, they could not be considered as manufacturing the same. The crucial question was whether Gear Assembly and Clutch Assembly manufactured by the respondents should be classified under CETH 8483 or CETH 8432.

Penalty Imposition Issue:
The Revenue sought to invoke penalty under Section 11AC of the Central Excise Act, 1944, contending that there was suppression of facts as the respondents had not filed a classification list or informed the department. The original adjudicating authority had imposed a penalty, which was set aside by the Commissioner (Appeals). The Tribunal considered that if there was a bona fide dispute regarding classification and the respondents voluntarily paid the duty to avoid litigation, then imposition of penalty under Section 11AC might not be justified. The Tribunal found that the respondents had a genuine case for disputing the classification, and since they paid the duty voluntarily, the penalty under Section 11AC was not warranted. Consequently, the Tribunal rejected the appeal filed by the Revenue and disposed of the cross-objection filed by the respondents.

In conclusion, the Appellate Tribunal, CESTAT, Mumbai, addressed the issues of classification of Gear Box Assembly and Clutch Assembly under CETH 8483 or CETH 8432, as well as the imposition of penalty under Section 11AC. The Tribunal upheld the classification under CETH 8483 based on the relevant Chapter heading analysis. Additionally, the Tribunal ruled that the penalty under Section 11AC was not justified as the respondents had a genuine dispute regarding classification and had voluntarily paid the duty. Therefore, the appeal by the Revenue was rejected, and the cross-objection by the respondents was disposed of.