2015 (11) TMI 452 - AT - Central Excise

Benefit of notification no.64/95-CE dated 16.03.1995 - Non production of certificate from an Officer not below the rank of a Rear Admiral of the Indian Navy or Coast Guard or Director General of Coast Guard or any other officer of Indian Navy or Coast Guard equivalent to the Joint Secretary to the Government of India - Held that - Appellant has contested the imposition of penalty on them on the grounds that it is only an issue of interpretation of exemption notification, therefore, penalty is not imposable. The facts that goods which are in dispute have been supplied by the appellant to a supplier who ultimately supplied the goods for intended use for Indian Navy and any goods supplied to Indian Navy is entitled for exemption notification no. 64/95 ibid. The only default on the part of the appellant is that they have not obtained certificate from Indian Navy in their own name issued by proper officer. Same facts were before this Tribunal in the case of Hindustan Petroleum Corporation Ltd. (2014 (2) TMI 324 - CESTAT MUMBAI) - Demand of duty along with interest is confirmed - Penalty imposed by way of impugned order is set aside - Decided partly in favour of assessee.

Summary

Issues:
Appeal against denial of benefit under notification no. 64/95-CE dated 16.03.1995; Entitlement for exemption under the notification; Imposition of penalty for availing inadmissible exemption.

Analysis:
The appellant, a manufacturer of bearings, appealed against the denial of benefits under notification no. 64/95-CE dated 16.03.1995. The issue arose when an audit revealed that the appellant did not possess a certificate from a competent authority for availing the exemption under the said notification. The requirement was that goods supplied for use in the construction of warships for Indian Navy or Coast Guard must be certified by a designated officer. As the appellant failed to produce this certificate in their name, the benefit was denied, leading to a show cause notice for duty, interest, and penalty. Both lower authorities upheld the denial, resulting in the appellant's appeal to the Tribunal.

The appellant's counsel admitted the lack of the required certificate, citing precedents where similar cases were decided against the appellant. However, the counsel contested the imposition of penalty, arguing it was an issue of interpreting the exemption notification. The respondent's representative opposed this stance, emphasizing the appellant's failure to directly supply goods to the Indian Navy, thus justifying the penalty as a consequence of willful non-compliance.

After hearing both parties, the Tribunal concurred with the appellant's counsel regarding the denial of benefits under the notification due to the absence of the necessary certificate. The Tribunal also referenced a prior case to support the non-imposition of penalty in such situations. Consequently, the Tribunal confirmed the duty demand with interest but set aside the penalty imposed by the lower authorities.

In conclusion, the appeal was disposed of with the confirmation of duty payment and interest, while the penalty was revoked based on the interpretation of the exemption notification and the absence of willful non-compliance by the appellant.