2014 (3) TMI 378 - AT - Central Excise

Calculation of duty - Manufacture of galvanized and corrugated sheets - whether process manufacture of galvanized and corrugated sheets amounts to manufacture or not - Penalty - Held that - Commissioner (Appeals) is not attributing any mala fide to the appellant and has made a clear finding that the dispute was a bona fide dispute supported by the Supreme Court s decision. The said finding of the Commissioner (Appeals) is not challenged by the Revenue. Accordingly, we are of the view that when the dispute was a legal and a bona fide dispute and no mala fide is attributable to the appellant, the question of imposition of penalty does not arise - Decided in favour of assessee.

Summary

Issues:
1. Whether the process of manufacturing galvanized and corrugated sheets amounts to manufacture for the purpose of duty assessment.
2. Imposition of penalty on the appellant by the Central Excise authorities.
3. Reduction of penalty amount by the Commissioner (Appeals) based on the nature of the dispute.

Analysis:
1. The dispute in this case revolved around whether the process of manufacturing galvanized and corrugated sheets constitutes "manufacture" for the purpose of duty assessment. The Tribunal differentiated between the two processes, concluding that while the galvanized process does not amount to manufacture, the corrugated process does. Consequently, the matter was remanded for the re-calculation of duty based on this distinction.

2. Subsequently, in de novo proceedings, the original adjudicating authority quantified the demand of duty at approximately Rs. 1.5 Crores and imposed a penalty of Rs. 60 Lakhs on the appellant. Upon appeal, the Commissioner (Appeals) acknowledged the genuine nature of the dispute and deemed the initial penalty amount as excessive. Citing the case of Techumesh Products (I) Ltd. v. CCE, Hyderabad, the Commissioner (Appeals) reduced the penalty to Rs. 30 Lakhs under Rule 173Q of the Central Excise Rules, 1944.

3. Notably, the Commissioner (Appeals) explicitly stated that the dispute was bona fide and referenced a Supreme Court decision to support this stance. The Revenue did not challenge this finding. Given the absence of any malice on the part of the appellant and the genuine nature of the dispute, the Tribunal concluded that the imposition of penalty was unwarranted. Consequently, the Tribunal set aside the penalty of Rs. 30 Lakhs imposed on the appellant, allowing their appeal with consequential relief.