2013 (11) TMI 1469 - AT - Central Excise

Rebate claim on motorcycle exported Motorcycle liable to pay NCCD Duty along with interest and penalty demanded - Whether imposition of penalty of Rs.2.02 crores required to be upheld or not Held that - The NCCD paid by the assessee is to be refunded to them in cash as their final product was cleared for export and the other duties paid by them already stand refunded to them - there was sufficient credit almost to the extent around Rs.36 crores accumulated with the appellant and same could have been utilized for payment of NCCD and such payment out of cenvat credit account could have been converted into refund in cash - by not paying NCCD, the appellant cannot be held to have been benefited in any manner - On the contrary, the same has resulted in financial loss to the appellant it would not be justifiable to invoke the penal provisions against the appellant. Relying upon Larsen & Toubro Ltd. Vs. CCE, Pondicherry 2008 (1) TMI 234 - CESTAT, CHENNAI - Non-payment of differential duty, which would have been refunded to the assessee on account of export of the goods under rebate, results in revenue neutrality and thus, penalty cannot be imposed - the order insofar as it relates to the penalty set aside and the duty is not being contested by the Advocate decided in favour of Assessee.

Summary

Issues:
1. Appellant exported motorcycles claiming rebate but failed to pay National Calamity Contingent Duty (NCCD).
2. Revenue issued a show cause notice proposing demand confirmation, interest, and penalty.
3. Appellant contests penalty imposition for non-payment of NCCD.

Analysis:
1. The appellant, engaged in motorcycle manufacturing, exported goods under rebate without paying NCCD. They later paid the NCCD upon realizing the mistake and claimed refund of duties initially paid. A show cause notice was issued for demand confirmation, interest, and penalty by the Revenue, leading to the current appeal.

2. The appellant's advocate argued that non-payment of NCCD was not deliberate, causing financial loss as they could have utilized accumulated cenvat credit for payment and subsequent refund. The advocate contended that the penalty should not be imposed as there was no deliberate intention or ulterior motive behind the non-payment of NCCD.

3. The Revenue, represented by the DR, justified the penalty imposition based on the liability to pay duty and non-payment reflecting malafide intent. Citing a Supreme Court decision, the Revenue argued for a 100% penalty imposition.

4. The Tribunal analyzed the case, noting that the appellant would have been entitled to a refund of the NCCD paid as their final product was exported under rebate, and other duties were already refunded. The Tribunal highlighted the appellant's financial loss due to non-payment of NCCD, as they could have converted the cenvat credit into cash. Referring to a previous Tribunal decision, the Tribunal held that non-payment resulting in revenue neutrality does not warrant penalty imposition.

5. Consequently, the Tribunal set aside the penalty imposition, as duty was not contested, and disposed of the appeal in favor of the appellant. The decision was based on the lack of benefit to the appellant from non-payment of NCCD, resulting in financial loss rather than gain. The Tribunal's decision aligned with the principle of revenue neutrality in similar cases.