2016 (3) TMI 129 - AT - Central Excise

Demand of education cess and imposing equal amount of penalty - the disputed goods cleared during the period from 09.07.2004 to 31.07.2004 were out of stock manufactured in the refinery prior to 09.07.2004 - Held that - Since, the appellant had maintained adequate records to show that the goods removed during 09.07.2004 to 31.07.2004 are out of stock of goods manufactured prior to 09.04.2004, it is of the view that action on the part of the adjudicating authority in rejecting the statutory documents maintained by the appellant, who is a public sector undertaking under the Ministry of Petroleum is not legal and proper. In view of the above and in view of the fact that the appellant had maintained the proper records to demonstrate that the goods in question were manufactured prior to 09.07.2004, the confirmation of demand on Education Cess along with interest and imposition of penalty on the appellant is not legally sustainable - Decided in favour of assessee

Summary

Issues:
Demand of education cess and penalty imposition based on non-payment during a specific period.

Analysis:
The case involved an appeal against an order confirming a demand of education cess and imposing a penalty on the appellant. The appellant, a bonded warehouse receiving non-duty paid petroleum products, was alleged to have not paid education cess amounting to a significant sum during a specific period. The dispute arose from the introduction of education cess under the Finance Act, 2004. The Central Excise audit team found discrepancies in the payment of education cess for goods cleared during the mentioned period, leading to show cause proceedings and the subsequent impugned order confirming the demand and penalty.

The appellant argued that the goods were manufactured before the introduction of the education cess and provided relevant documents during adjudication to support this claim. However, the adjudicating authority rejected these documents, leading to the confirmation of the demand based on the audit objection. The appellant's contention was that the goods cleared during the disputed period were part of stock manufactured prior to the levy of education cess, as evidenced by the records presented during the proceedings.

Upon review, the tribunal found that the appellant had adequately demonstrated through maintained records that the goods in question were indeed manufactured before the introduction of the education cess. The tribunal criticized the adjudicating authority for disregarding the statutory documents provided by the appellant and emphasized that the rejection of such evidence was not legally justified. Consequently, the tribunal set aside the impugned order, ruling in favor of the appellant and deeming the demand and penalty unsustainable in light of the evidence presented.

In conclusion, the tribunal's decision highlighted the importance of maintaining proper records to substantiate claims regarding the timing of manufacturing in cases involving tax liabilities such as education cess. The judgment underscored the significance of statutory documents and criticized the authority's dismissal of valid evidence, ultimately resulting in the appeal being allowed in favor of the appellant.