2015 (11) TMI 456 - AT - Central Excise

Duty demand - Abatement claim - Penalty for abatement - Held that - Products in question are considered as evasion prone goods hence the government brought in the legislation to tax the said goods based upon the production capacity. The legislative intent is very clear that though the duty liability is on production capacity ascertained, abatement was granted if the procedures are followed. Having not followed the procedure, which are required for an assessee to inform the authorities that there is closure of unit due to non availability of power and revenue authorities on inspection record the same and grant an abatement. In the case in hand, it is undisputed that appellant has not filed any declaration for abatement; they cannot claim the same belatedly even if there was no power connection during the specific period in a month. To that extent, we hold that appellant has no case on merits and the adjudicating authority was correct in confirming the demands with interest. - appellant could have entertained a bone fide belief that the abatement from the duty payment can be claimed subsequently, hence we find that the penalties are unwarranted. Accordingly, we set aside the penalties imposed - Decided partly in favour of assessee.

Summary

Issues:
1. Whether the appellant is eligible for abatement of Central Excise duty under the production capacity based duty discharge scheme.
2. Whether the appellant's failure to follow the procedure for claiming abatement disqualifies them from availing the benefit.
3. Whether penalties imposed on the appellant are justified.

Analysis:
Issue 1:
The appellant claimed eligibility for abatement of Central Excise duty under the production capacity based duty discharge scheme for the period in question. The revenue contended that abatement must be claimed following the prescribed procedures and cannot be extended without compliance. The adjudicating authority confirmed the duty demand, interest, and penalties. The appellant argued that they were entitled to abatement under Rule 96ZO of the Central Excise Rules 1944 due to power restrictions in the area. However, the tribunal held that the appellant failed to follow the required procedure for claiming abatement, and thus, their claim was not valid. The legislative intent was to grant abatement only if procedures were adhered to, which the appellant did not fulfill.

Issue 2:
The tribunal found that the appellant's failure to file a declaration for abatement, despite the closure of the unit due to power unavailability, rendered their claim invalid. The rules mandated informing the authorities of such closures to qualify for abatement. Since the appellant did not follow this procedure, they could not belatedly claim abatement, even if there was no power connection during a specific period. The tribunal concluded that the appellant had no merit in their case, and the adjudicating authority correctly confirmed the demands with interest.

Issue 3:
Regarding the penalties imposed on the appellant, the tribunal noted that the appellant may have genuinely believed they could claim abatement later, justifying their actions. As a result, the tribunal deemed the penalties unwarranted and set them aside. Thus, the appeal was allowed in part, upholding the demand with interest but overturning the imposed penalties.

In conclusion, the tribunal upheld the demand with interest but set aside the penalties imposed on the appellant, based on the failure to follow the prescribed procedure for claiming abatement.