2018 (7) TMI 1946 - AT - Central Excise

Non-payment of Central Excise Duty - biscuits valuing upto ₹ 100/- per kg. - It is the case of the appellant that they were under the bonafide belief that biscuits in packages valued upto ₹ 100/- per kg. were exempted from payment of Central Excise duty - penalty - HELD THAT - During the period from 01.04.2007 to 30.04.2007, the appellant had paid the duty on the value of the goods up to ₹ 100/- per kg.. But the fact remains that during that period, the exemption was up to the slab of ₹ 50/- per kg.. This resulted in lesser payment of duty. However, appellant paid the entire amount of differential duty along with interest. Since the goods were cleared under Central Excise Invoices,there was no question of suppression of facts or willful mis-statement with an intent to evade the payment of duty. Thus, the penalty imposed under Section 11AC is not sustainable and the same is set aside. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Appellant's belief regarding exemption from Central Excise duty for biscuits valued up to ?100/kg
- Imposition of penalty under Section 11AC of the Central Excise Act, 1944

Analysis:
1. The appellant believed that biscuits valued up to ?100/kg were exempt from Central Excise duty. The show-cause notice alleged non-payment of duty for biscuits exceeding ?50/kg but not exceeding ?100/kg. The Adjudicating Authority confirmed a demand of ?32,03,988 along with interest and imposed a penalty under Section 11AC. The appellant appealed, arguing their bonafide belief in the exemption. The Tribunal noted that during the relevant period, duty exemption was only up to ?50/kg, leading to lesser duty payment by the appellant. Despite this, the appellant paid the differential duty and interest promptly upon realizing the error. As the goods were cleared with proper documentation and no intent to evade duty was found, the Tribunal held the penalty under Section 11AC as unsustainable, ultimately allowing the appeal.

2. The penalty under Section 11AC was a significant issue in this case. The appellant contended that their actions were based on a genuine belief in the duty exemption for biscuits valued up to ?100/kg. The Tribunal considered the circumstances, including the prompt payment of the differential duty upon notification of the error. Given the absence of willful misstatement or suppression of facts, the Tribunal concluded that the penalty imposed was unwarranted. Consequently, the Tribunal set aside the penalty under Section 11AC, thereby ruling in favor of the appellant and allowing the appeal.