2012 (1) TMI 117 - AT - Central Excise

Duty demand - SSI exemption under Notification No. 8/2002-C.E., dated 1-3-2002 and 8/2003 as amended. Exemption Notification No. 8/2003-C.E. was amended vide Notification No. 30/2003-C.E., dated 1-4-2003 - Penalty under Section 11AC - Held that - considering the sequence of events, the clarification dated 6-8-2003 issued by C.B.E. & C. and prompt payment of duty and interest on 21-8-2003, we are of the view that this is a case where there was no intention on the part of the Appellants to evade payment of duty and provisions of Section 11AC of the Central Excise Act would not apply in this case. This is a case which would get covered by provisions of Section 11A(2B) of the Central Excise Act, therefore we set aside the penalty imposed - Decided partly in favour of assessee.

Summary

Issues:
1. Calculation of duty short paid during a specific period.
2. Refund claim of duty amount deposited for the same period.
3. Interpretation of SSI exemption under relevant notifications.
4. Validity of penalty imposed under Section 11AC of the Central Excise Act.
5. Applicability of Section 11A(2B) of the Central Excise Act.

Analysis:

1. Calculation of Duty Short Paid:
The case involved two appeals based on the same facts regarding the demand of duty short paid during April 2003 to July 2003. The appellants, engaged in the manufacture of dutiable ayurvedic medicines, had availed SSI exemption under relevant notifications. However, they exceeded the clearances limit for the exemption during the financial year 2002-03, leading to the demand for payment of Central Excise duty for the period in question.

2. Refund Claim and Penalty Imposition:
The appellants claimed a refund of the duty amount deposited for the said period when the short levy was identified. The Revenue issued a Show Cause Notice proposing the confirmation of duty amount not initially paid, along with interest and penalty under Section 11AC of the Act. The adjudicating authority confirmed the duty demand, imposed a penalty, and the Commissioner (Appeals) upheld the order, leading to the appeal before the Tribunal.

3. Interpretation of SSI Exemption:
The main argument revolved around the calculation of the "aggregate value of clearances" under the exemption notification. The appellants contended that the value of exempted products should not be considered for calculating the aggregate value. They relied on a Supreme Court decision to support their argument, emphasizing that since excise duty is not chargeable on exempted goods, the value need not be determined under Section 4 of the Central Excise Act.

4. Validity of Penalty Imposed:
The appellants argued that the penalty imposed under Section 11AC was not maintainable as there was no intention to evade payment of duty, citing a circular acknowledging doubts in the calculation method. The Tribunal considered the sequence of events, the clarification issued by C.B.E. & C., and the prompt payment of duty and interest by the appellants. It was concluded that there was no intention to evade payment, and thus, the penalty under Section 11AC was set aside.

5. Applicability of Section 11A(2B):
The Tribunal found that the case fell under the provisions of Section 11A(2B) of the Central Excise Act, and therefore, the penalty imposed was set aside. Consequently, one appeal was partially allowed by setting aside the penalty, while the other appeal was rejected.

This detailed analysis of the judgment highlights the key issues, arguments presented, legal interpretations, and the final decision reached by the Tribunal regarding the calculation of duty, refund claim, interpretation of SSI exemption notifications, penalty imposition, and the applicability of relevant sections of the Central Excise Act.