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2015 (10) TMI 1655 - AT - Central ExciseDuty demand - Clearance of goods on the basis of EPCG License - Penalty u/s 11AC - Held that - Appellant is clearing the goods to their buyers on the strength of EPCG licence which were endorsed in the name of the appellant by the buyer of the goods and the appellant is filing ER-1 return showing clearance against EPCG licence. But it is admitted fact that the appellant has not disclosed that under which notification they are claiming exemption and were not paying duty. As the appellant is filing ER-1 return regularly showing clearance against EPCG licence and not disclosed that under which notification number they are claiming exemption, burden of proof cast on the Revenue to ask the appellant under which notification they are claiming exemption. Without doing this effort and without scrutinizing ER-1 return, the investigation was conducted. Therefore, suppression cannot be alleged in these circumstances. Furthermore, as the appellant paid duty along with interest on pointing out by the department, show cause notice was not required to be issued as per Section 11A(2B) of Central Excise Act, 1944 read with Board s Circular No. 137/167/2006-CX-04, dated 3-10-2006. Consequently, the penalty is not imposable on the appellant. - Impugned order is set aside - Decided in favour of assessee.
Issues:
Penalty under Section 11AC of Act imposed on the appellant, Appeal against dropping of penalty by adjudicating authority, Imposition of penalty on the appellant by Commissioner (Appeals), Allegation of suppression of facts by the appellant, Burden of proof on Revenue to ask appellant about exemption notification, Requirement of show cause notice under Section 11A(2B) of Central Excise Act. Analysis: The appellant, engaged in manufacturing forged goods, cleared products against an EPCG license without duty payment. Subsequently, investigation revealed the appellant was not entitled to this clearance. The adjudicating authority initially dropped penalties due to duty payment and lack of show cause notice. The Revenue appealed, leading to the imposition of penalties by the Commissioner (Appeals). The appellant argued they cleared goods based on EPCG license directions, regularly filing ER-1 returns without duty payment. The appellant contended that duty payment upon department notification negated the need for a show cause notice and penalty imposition. The Revenue argued suppression of facts by the appellant, citing non-disclosure of the exemption notification for duty claims. They asserted that the investigation revealed non-payment of duty, justifying penalties. The Revenue contended that ER-1 returns lacked notification details, constituting suppression. The Tribunal noted the appellant's clearance against EPCG licenses in ER-1 returns but acknowledged the lack of notification disclosure for duty exemption. The Tribunal held the Revenue responsible for verifying exemption notification details, which they failed to do before investigation. As the appellant paid duty post-notification, no show cause notice was necessary under Section 11A(2B) of the Central Excise Act. Consequently, the Tribunal deemed penalties inapplicable due to the Revenue's failure to ascertain exemption notification details. In conclusion, the Tribunal set aside the penalty-imposing order, allowing the appellant's appeal with consequential relief.
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