2017 (6) TMI 932 - AT - Central Excise

SSI exemption - N/N. 8/2003-CE dated 01/03/2003 - duty short paid on the export to Nepal under Section 11AC of the Act - contravention of the provisions of Rule 19 - Held that - there is no suppression of facts and/or any contumacious conduct on the part of the appellant - At the very first instance they have stated that duty had not been paid to the factum of export to Nepal and other countries which have not been found to be untrue. The duty was payable for the export of ₹ 30,000/- in Nepal in view of Explanation (G) to Clause 5 of the N/N. 8/2003-CE. In this view of the matter, the penalty of ₹ 10,000/- dropped. Appeal allowed - decided partly in favor of appellant.

Issues: Exemption under notification No. 8/2003-CE, contravention of provisions of Rule 19, duty short paid on exports to Nepal, penalty imposition.

Exemption under Notification No. 8/2003-CE: The appellant, engaged in the production of specific goods covered by Chapter 84 of the Central Excise Tariff Act, 1985, availed exemption under notification No. 8/2003-CE during the financial year 2006-07. A show cause notice was issued as the appellant had exceeded the exemption limit by a certain amount and had not paid excise duty on the excess clearance. The Revenue alleged that the appellant had not followed proper procedures and contravened the rules. The appellant argued that the clearances were for export to merchant exporters who believed exports were not subject to excise duty. The Revenue contended that the appellant wrongly excluded the value of exports to Nepal from the exemption limit, leading to a demand for duty payment.

Contravention of Rule 19 and Duty Short Paid on Exports to Nepal: The Assistant Commissioner adjudicated the show cause notice, confirming the proposed demand for duty payment and imposing a penalty for contravention of Rule 19 and duty short paid on exports to Nepal. The appellant appealed to the Commissioner (Appeals), who held that duty was not payable for exports to countries other than Nepal and Bhutan, dropping the levy of duty and penalty on those exports. However, regarding exports to Nepal, the duty was confirmed along with a penalty, as the appellant had not paid duty on the same, as required by Explanation (G) to Notification No. 8/2003-CE.

Penalty Imposition: The Tribunal, after hearing the submissions from both sides, found no suppression of facts or contumacious conduct by the appellant. It was noted that the appellant had acknowledged the duty not being paid on exports to Nepal and other countries. The Tribunal agreed with the duty payment requirement for the export to Nepal based on Explanation (G) to Clause 5 of Notification No. 8/2003-CE. Consequently, the penalty imposed by the Commissioner (Appeals) was dropped, and the appeal was allowed in part. The appellant was granted consequential benefits, and the assistance provided by the Amicus Curiae was appreciated.

This comprehensive analysis of the judgment highlights the issues of exemption under the notification, contravention of rules, duty payment on exports to Nepal, and penalty imposition, providing a detailed overview of the legal proceedings and the final decision of the Tribunal.

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