2017 (5) TMI 1445 - AT - Central Excise

Deemed Manufacture - packing, repacking, lebelling and relabeling of spare parts - Section 2(f) (iii) of CEA, 1944 read with N/N. 2/2006-CE(NT) dated 01/03/2003 - Held that - the admitted fact on record that the LML Ltd. had admitted their mistake and deposited the tax with interest and also informed the competent official of Revenue, in this view of the matter, the show cause notice is bad and not tenable as no further amount either towards duty or interest was recoverable - appeal allowed - decided in favor of appellant.

Summary

Issues involved:
Demand and confirmation of duty, levy of penalty under Section 11AC of the Act, levy of penalty under Rule 26 on M/S. Sachdeva Auto Centre.

Analysis:

Issue 1: Demand and confirmation of duty
The issue in these appeals revolved around the demand and confirmation of duty on the appellant LML Ltd. for a specific amount with interest and penalties. The appellant was engaged in activities like packing, repacking, labeling, and relabeling of spare parts, which were considered as deemed manufacture under the Central Excise Act. The appellant did not have Central Excise registration for these activities. The investigation revealed that spare parts were being received by M/S. Sachdeva Auto Centre from LML Ltd., and after further correspondence, the appellant admitted their liability and deposited the tax along with interest. However, the Revenue issued a show cause notice demanding the same amount again, leading to the adjudication of the notice and confirmation of the proposed demand along with penalties.

Issue 2: Levy of penalty under Section 11AC of the Act
The appellant LML Ltd. was subjected to a penalty under Section 11AC of the Act, along with interest and cess. The penalty amount was confirmed and appropriated after adjudication. Additionally, penalties were imposed under Rule 26 on M/S. Sachdeva Auto Centre and the Manager Excise of LML Ltd. The appellant appealed against the levy of penalties and the confirmation of demand, while the Revenue appealed for a higher penalty under Rule 26, as the minimum prescribed penalty was not levied.

Judgment:
After hearing the arguments and considering the contentions, the Member (Judicial) found that the appellant had admitted their mistake, deposited the tax with interest, and informed the Revenue officials. Due to this, the show cause notice was deemed untenable as no further amount towards duty or interest was recoverable. Consequently, the impugned order was set aside, and the appeal filed by the appellant LML Ltd. was allowed, while the appeal filed by the Revenue was dismissed. The parties were entitled to consequential benefits as per the law.