2012 (5) TMI 549 - AT - Central Excise

Exemption under Notification No. 67/95-C.E., dated 16-3-1995 - Penalty - Misdeclaration - Suppression of facts - Intention to evade duty - Whether the appellants are entitled for the benefit of Notification No. 67/95-C.E., dated 16-3-1995 - Held that - The Notification provides exemption to inputs manufactured in a factory and used within the factory of production in or in relation to the manufacture of the final product provided that the benefit of Notification is not available to the inputs used in or in relation to the manufacture of final product which are exempt from the whole of the duty of excise or are chargeable to nil rate of duty. - Appellants are clearing the pouches of coolant with the engine oil GTC-X Extra. The coolant manufactured in the factory is not an input used in the manufacture of GTX Extra, as the same has been supplied in pouches along with the GTX Extra. In these circumstances, we find no infirmity in the order whereby the demand is confirmed after denying the benefit of the Notification. Appellant filed a declaration knowing well that the coolant is not used as input in the further manufacture of excisable goods. Therefore, there is a clear intention to evade payment of duty. In view of this, we find that the lower appellate authority has rightly imposed the penalty also - Decided against assessee.

Issues: Entitlement to benefit of Notification No. 67/95-C.E., dated 16-3-1995; Denial of exemption from duty for inputs used in manufacture of final product; Imposition of penalty for intention to evade payment of duty.

Analysis:

1. Entitlement to benefit of Notification No. 67/95-C.E., dated 16-3-1995:
The case revolved around the appellants' claim for the benefit of Notification No. 67/95-C.E., dated 16-3-1995. This Notification provides exemption to inputs manufactured in a factory and used within the factory of production in or in relation to the manufacture of the final product. The issue was whether the appellants were entitled to this benefit. The adjudicating authority denied the benefit as the Heavy Duty Coolant (HDC) manufactured by the appellants was considered a final product, not an input for the manufacture of any final product. The Commissioner (Appeals) upheld this decision, leading to the appeal before the Tribunal.

2. Denial of exemption from duty for inputs used in manufacture of final product:
The Tribunal found that the appellants were clearing pouches of coolant with engine oil GTC-X Extra, and the coolant was not used as an input in the manufacture of GTX Extra. As the coolant was supplied in pouches along with GTX Extra, it was considered a final product, not an input for further manufacturing. Consequently, the Tribunal upheld the order confirming the demand after denying the benefit of the Notification. This decision was based on the interpretation of the Notification's provisions regarding the exemption of inputs used in the manufacture of final products.

3. Imposition of penalty for intention to evade payment of duty:
The Tribunal noted that the appellants filed a declaration despite knowing that the coolant was not used as an input in the further manufacture of excisable goods. This act indicated a clear intention to evade payment of duty. As a result, the lower appellate authority was deemed to have rightly imposed the penalty for this intentional evasion of duty. The imposition of the penalty was justified based on the appellant's actions and the intention behind filing a declaration seeking exemption under the Notification.

In conclusion, the Tribunal dismissed the appeal, affirming the denial of the benefit of the Notification, the confirmation of the duty demand, and the imposition of the penalty due to the appellant's intention to evade payment of duty.

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