2017 (1) TMI 917 - AT - Central Excise

100% EOU - inclusion of SAD in assessable value - N/N. 23/03-CE dated 31/03/2003 - bonafide belief - wilful intent or not - Held that - the appellant had not placed any material on record in support of their contention of bonafide belief and therefore, the submission of the Ld. Advocate cannot be accepted - the appellant is entitled to the option to pay penalty @ 25% of the duty, subject to the conditions as provided under Section 11AC of the Act. In the instant case, the Adjudicating Authority had not given such option to the appellant. Appeal disposed off - decided partly in favor of appellant.

Summary

Issues:
Calculation of duty payable under notification No. 23/03-CE dated 31/03/2003 excluding SAD component, imposition of penalty under Section 11AC of the Central Excise Act, 1944, bonafide belief of the appellant regarding duty payment.

Analysis:
The case involved M/s. Websel Energy Systems Ltd., a 100% E.O.U. manufacturing Solar Photovoltaic Cells and modules, clearing goods to DTA units on payment of 50% of customs duty as per notification No. 23/03-CE dated 31/03/2003. The appellant excluded the SAD component from duty calculation, arguing that since sales tax was exempt on the goods, SAD was not payable on DTA clearances. However, the Revenue contended that SAD was not excludable from duty calculation under the said notification. A Show Cause Notice was issued demanding payment along with interest and penalty under Section 11AC of the Central Excise Act, 1944.

The Ld. Advocate for the appellant argued that there was no suppression or misstatement of facts, hence penalty under Section 11AC should not apply. On the other hand, the Ld. A.R. for the respondent highlighted that the notification did not exempt SAD if sales tax was exempted, citing relevant case law.

During the hearing, the appellant did not dispute the duty demand but vehemently opposed the penalty. The appellant claimed a bonafide belief in not paying duty, but failed to provide supporting evidence. The Adjudicating Authority did not offer the appellant the option to pay penalty at 25% of the duty amount, as per Section 11AC. The Tribunal upheld the duty demand with interest but allowed the appellant to pay a reduced penalty of 25% of the duty amount, provided it was paid within 30 days of the order communication.

In conclusion, the Tribunal partially allowed the appeal, maintaining the duty demand and interest but reducing the penalty amount to 25% of the determined duty, subject to timely payment conditions.