2011 (11) TMI 566 - AT - Central Excise

Penalty u/s 11AC - Duty demand - Held that - as per the order placed by Hindustan Coca Cola Beverages Pvt. Ltd., the appellant was to supply a new conveyor system and the appellant supplied the same under four invoices on payment of appropriate duty. Even the duty has been paid on the airfreight charges. The old conveyor system was cleared by Hindustan Coca Cola Beverages Pvt. Ltd. on 13-3-2003 whereas the appellant had already cleared the new system under four invoices upto 6-3-2003 and there is no evidence on record to show that the appellant modified the old conveyor system and cleared the same. In these circumstances, we find that the demand is not sustainable. The demand and consequential penalty are set aside - Decided in favour of assessee.

Summary

Issues:
- Confirmation of demand along with interest and penalty under Section 11AC of the Central Excise Act for clearing old conveyor system without payment of duty.
- Appellant's contention of receiving old conveyor system from another company and clearing it without modification.
- Revenue's argument of undervaluation of goods due to additional charges for modification.

Analysis:
The judgment by the Appellate Tribunal CESTAT MUMBAI addressed the issue of confirming a demand with interest and penalty under Section 11AC of the Central Excise Act. The appellant appealed against the order confirming a demand of Rs. 1,14,923/- for clearing an old conveyor system without payment of duty. The appellant claimed to have received the old conveyor system from another company, Hindustan Coca Cola Beverages Pvt. Ltd., and cleared it without any modification. The contention was that the old system was received as part of a buy-back agreement when the new system was supplied under four invoices. The appellant argued that duty was paid even on the freight charges for the supply of the new conveyor system. The Tribunal noted that the old conveyor system was cleared by Hindustan Coca Cola Beverages Pvt. Ltd. on 13-3-2003, while the new system had been cleared by the appellant under four invoices up to 6-3-2003. There was no evidence to support the claim that the appellant modified the old conveyor system and cleared it without payment of duty. Consequently, the Tribunal found the demand to be unsustainable and set it aside, along with the consequential penalty. The appeal was allowed, emphasizing the lack of evidence supporting the Revenue's argument of undervaluation of goods due to additional charges for modification. The judgment provided a detailed analysis of the facts and legal provisions involved, resulting in the decision to set aside the demand and penalty imposed on the appellant.