2008 (5) TMI 115 - AT - Central Excise

Goods cleared without payment of duty, during pendency of their request to clear goods under non-existent notification (No. 82/92) lenient view is required to be taken so penalty not imposable out of two consignment one received back - adjustment claim rejected by CCE and ordered assessee to file refund claim held that since original authority had demanded duty against both consignments it would be appropriate to determine the liability as a whole on both clearances adjustment allowed

Summary

Issues:
1. Eligibility for duty exemption under Notification No. 82/92-C.E.
2. Calculation of duty payable under Invoice No. 7 dated 15-4-2002.
3. Adjustment of duty paid on rejected goods.
4. Reduction of penalty imposed.

Eligibility for duty exemption under Notification No. 82/92-C.E.:
The appellants, a 100% EOU, sought permission to clear goods without duty payment under Notification No. 82/92-C.E. However, the jurisdictional Deputy Commissioner informed them that the benefit was no longer available. Despite this, the appellants cleared goods to different entities claiming exemption under the same notification. A show cause notice was issued for non-payment of duty, which was confirmed by the original adjudicating authority. The appellants argued they were eligible for exemption under Notification No. 2/95 dated 4-1-95, leading to a reduced duty payable amount. The Commissioner (Appeals) allowed this benefit, along with directing the filing of a refund claim for duty paid on rejected goods. The penalty was also reduced to Rs. 1 lakh.

Calculation of duty payable under Invoice No. 7 dated 15-4-2002:
The appellants contested the duty calculation under Invoice No. 7, claiming to have paid Rs. 8,04,960 against the actual payable amount of Rs. 10,33,344. The Tribunal found the duty payable to be Rs. 2,28,384, differing from the amount confirmed by the Commissioner (Appeals). Additionally, an amount of Rs. 43,347 was to be adjusted.

Adjustment of duty paid on rejected goods:
The Commissioner (Appeals) noted that adjustment of duty paid on rejected goods cannot be done during adjudication and required the filing of a refund claim. The Tribunal disagreed, stating that the liability for both consignments should be determined together, rather than being segregated. The duty payable under Invoice No. 7 was recalculated, leading to a reduced amount and adjustment of Rs. 43,347.

Reduction of penalty imposed:
The appellants had sought permission under a non-existent notification, but due to delayed response from the Deputy Commissioner, they cleared goods without duty payment. Considering the circumstances and the appellant's request for leniency, the penalty was set aside, and the appeal was allowed.

This judgment highlights the importance of complying with duty exemptions, accurate duty calculations, and proper procedures for duty adjustments and penalty imposition.