2016 (1) TMI 1012 - AT - Central Excise

Benefit of Exemption Notf No. 182/87-CE dt 10/7/87 denied - manufacturing of Coal Tubs in the mines. - demand confirmed - Held that - Appellant is a public sector undertaking and it is not ethical on their part now to agitate the time bar aspect afresh after conceding the same before us in the earlier proceedings. Reliance by the appellant on the Apex Court s case law in the case of Union of India Vs Madhumilan syntax Ltd (2006 (2) TMI 170 - SUPREME COURT OF INDIA ) is misplaced because the order passed by the Apex court was as a result of a writ petition against an order of the lower authorities without affording any opportunity to the assessee. In the present case before us the concession was given after the adjudicating authority decided the case after following the principles of natural justice and the case was argued at length before this bench before remand order dt 1/5/2000 was passed. Therefore, the ratio laid by Hon ble Apex Court is not applicable to the present factual matrix when appellant is a Public Sector undertaking and principles of natural justice have not been violated earlier. In view of the above observations appeal filed by the appellant on the grounds of limitations again, when not even agitated before the Adjudicating authority in remand proceedings, can not be entertained & is required to be dismissed. So for as imposition of penalty upon the appellant is concerned in this case it is a case of imposing penalty under Rule- 9 (2), read with Rule-173 Q, of the erstwhile Central Excise Rules 1944. Appellant being a large company did not bother to check whether duty liability got attracted during the relevant period. It is now a well understood legal proposition that ignorance of law is no excuse. However, looking to the facts on record and appellant being a Public Sector Undertaking we are of the opinion that penalty of ₹ 10 lakh, imposed upon the appellant, is excessive we accordingly reduce this penalty from ₹ 10, lakh to ₹ 10,000/- (Ten thousand only)

Summary

Issues involved:
Denial of exemption benefit, confirmation of demand, penalty imposition, admissibility of credit, manufacturing activity determination, duty liability, admissibility of exemption notification, availability of Modvat credit, time bar aspect, imposition of penalty, reduction of penalty.

Denial of Exemption Benefit:
The appeal was filed against the denial of the benefit of Exemption Notification No. 182/87-CE. The appellant argued that they were under the belief that their product was exempted during the disputed period. However, the benefit of the exemption was not admissible to them. The appellant cited various case laws to support their argument but ultimately conceded the inadmissibility of the exemption.

Confirmation of Demand and Penalty Imposition:
The Adjudicating authority confirmed a demand of Rs. 1,58,38,712 against the appellant and imposed a penalty of Rs. 10 lakh under Rule-9(2) of the Central Excise Rules-1944. The appellant did not press on the point of limitations during the earlier proceedings, and the time bar aspect was not raised before the adjudicating authority. The Tribunal observed that it was not ethical for the appellant to now agitate the time bar aspect after conceding it earlier. The penalty imposed was considered excessive, and it was reduced to Rs. 10,000 due to the appellant being a Public Sector Undertaking.

Admissibility of Credit and Manufacturing Activity Determination:
The Tribunal analyzed the manufacturing activity of the appellant related to the coal tubs. The Tribunal rejected the appellant's plea that the process of fitting and assembling components of coal tubs did not amount to manufacturing. It was determined that the activity undertaken by the appellant resulted in the emergence of a new product classifiable under the Central Excise Tariff Act. The Tribunal also addressed the demand in respect of repaired coal tubs, concluding that no duty was leviable on the repaired items.

Availability of Exemption Notification and Modvat Credit:
The appellant raised an alternative plea regarding the availability of the exemption notification for the coal tubs produced in the workshop. They also sought to avail the benefit of Modvat credit for duty paid on inputs. The Tribunal agreed with both submissions but remanded the matter to the Adjudicating authority for a fresh decision as these points were not raised before the Commissioner earlier.

Time Bar Aspect and Imposition of Penalty:
The Tribunal emphasized that the time bar aspect was not pressed before them and could not be entertained as it was not raised before the Adjudicating authority. The appellant's reliance on a specific case law was deemed misplaced, and the appeal on the grounds of limitations was required to be dismissed. Regarding the penalty imposed, the Tribunal reduced it from Rs. 10 lakh to Rs. 10,000 considering the appellant's status as a Public Sector Undertaking.

In conclusion, the appeal was allowed only to the extent of reducing the penalty imposed on the appellant. The Tribunal provided detailed reasoning for each issue involved, addressing the legal arguments presented by both parties and applying relevant case laws and legal principles to reach its decision.