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2015 (10) TMI 1237 - AT - Central ExcisePenalty under Rule 25 read with Section 11AC - Bonafide belief - Held that - Appellant in this proceeding is not contesting the chargeability of duty on Spent Earth. It is observed from the Hon ble Apex Court judgement in the case of CCE, Chandigarh I vs Markfed Vanaspati and Allied Industries Ltd (2003 (4) TMI 98 - SUPREME COURT OF INDIA) that the issue of chargeability of duty on spent earth was settled by the Apex Court. In view of this judgement and bonafide belief on the part of the appellant that no duty liability is attracted on spent earth even after amendment of Section 2(f) of the Central Excise Act 1944. The case law of CCE Jalandar I vs AG Flats Ltd (2011 (7) TMI 968 - CESTAT, NEW DELHI) passed in 2012 makes it clear that there was chargeability of duty on the bye product. The appellant during the period May 2008 to May 2009 may not have any to malafide intention to evade payment of Central Excise duty when by the judgement of Apex Court in the case of CCE Chandigarh I vs Markfed Vanaspati and Allied Industries Ltd (supra) it was held that spent earth is not by an act of manufacturer - penalty imposed by the lower authorities under Rule 25 of the Central Excise Act of 2002 read with Section 11AC of the Central excise Act 1944, is not sustainable and is required to set aside - While confirming the demand of duty, penalty sete aside - Decided partly in favour of assessee.
Issues:
1. Contesting penalty under Rule 25 of the Central Excise Rules 2002. 2. Interpretation of duty liability on Spent Earth. 3. Application of case law CCE Jalandar vs AG Flats Ltd [2012(277)ELT.96]. 4. Bonafide belief of the appellant regarding duty liability. 5. Sustainability of penalty under Section 11AC of the Central Excise Act 1944. Analysis: The appellant contested the penalty of Rs. 4275 under Rule 25 of the Central Excise Rules 2002, arguing that duty liability on Spent Earth was not applicable based on a judgment of the Hon'ble Apex Court. The appellant had paid the duty liability along with interest but disputed the penalty. The appellant believed that no duty liability was attracted on Spent Earth, citing the necessity to establish manufacturing activity and marketability before Central Excise Duty could be imposed, as per the judgment of CCE, Chandigarh I vs Markfesd Vanaspati and Allied Industries Ltd. The Authorized Representative for the Revenue relied on the case law CCE Jalandar vs AG Flats Ltd [2012(277)ELT.96] to argue that duty liability was applicable on the by-product emerging during the manufacturing process, as per the amended Section 2(f) of the Central Excise Act 1944. The penalty was deemed justified by the Authorized Representative. Upon hearing both sides and examining the case records, it was noted that the appellant did not contest the duty chargeability on Spent Earth. Referring to the judgment of the Hon'ble Apex Court in the case of CCE, Chandigarh I vs Markfed Vanaspati and Allied Industries Ltd, it was established that the issue of duty liability on Spent Earth was settled. The appellant's bonafide belief that no duty liability was attracted, even after the amendment of Section 2(f) of the Central Excise Act 1944, was considered. The judgment in CCE Jalandar I vs AG Flats Ltd (2012) clarified the duty chargeability on the by-product. The appellant's lack of malafide intention to evade duty payment during the relevant period was acknowledged. Consequently, the penalty imposed under Rule 25 of the Central Excise Act 2002 read with Section 11AC of the Central Excise Act 1944 was deemed unsustainable and was set aside. The appeal filed by the appellant was allowed, specifically to the extent of overturning the penalty imposed.
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