2017 (7) TMI 886 - AT - Central Excise

Manufacture - Aluminum frames, shutters and other parts of doors and windows - it appeared that the activity carried out by M/s. Ascon Arabian Aluminium Company (P) Ltd., amounted to manufacture and they have manufactured the same without obtaining Central Excise registration and cleared the same without following the Central Excise procedure and without payment of duty - Held that - as per the direction of the Tribunal, the learned Commissioner has clarified the entitlement of modvat credit of ₹ 18,17,187/- which the Commissioner is held that the appellant is entitled to the same. Further the Commissioner has also reworked the duty liability after considering the SSI exemptions and has determined the total duty payable amounting to ₹ 6,18,103/-. Further the learned Commissioner has held that the appellant is liable to pay interest on the duty demand as the interest liability is compensatory in character which is imposed on the assessee who has withheld the payment of any tax or duty and such liability arises automatically by operation of law. Further I find that the learned Commissioner has observed that though the appellant is liable to pay the mandatory penalty under Section 11AC but since the Tribunal in the impugned order has directed him to impose nominal penalty and therefore he has only imposed a nominal penalty of ₹ 10,000/- under Section 11AC. Redemption fine - Held that - the Tribunal has observed that there are several judgments for not imposing mandatory penalty and redemption fine in the facts and circumstances where the goods are cleared without payment of duty if bonafides are established - redemption fine dropped. Penalty - Held that - the imposition of penalty of ₹ 10,000/- is justified. Appeal allowed - decided partly in favor of appellant.

Summary

Issues:
Determining modvat credit entitlement, demand of duty, interest, penalty imposition, confiscation of goods, and redemption fine.

Analysis:
The case involved appeals by the assessee and the Revenue against an order determining modvat credit entitlement, confirming duty demand, interest, and penalties. The matter originated from an agreement with a builder for supply of aluminum frames without proper Central Excise procedures. The Commissioner initially confirmed the demand, interest, and penalties. The CESTAT remanded the matter twice for re-computation and re-determination of penalties. The High Court dismissed the Department's appeal against extending modvat benefit. In the final order, the Commissioner allowed modvat credit of ?18,34,353, demanded ?6,18,103 in duty, imposed penalties, and ordered confiscation with redemption fine options.

The appellant argued against the delay in the order, asserting entitlement to modvat credit and challenging the interest imposition. They claimed a refund due to them after deducting the duty demand. The appellant cited legal precedents to support their position. The Revenue defended the order, stating it complied with Tribunal directions, clarified modvat credit, and imposed penalties correctly. The Commissioner's observations on refund requests were noted.

The Commissioner's order was upheld, considering compliance with Tribunal directions, determination of modvat credit and duty liability, interest imposition, and nominal penalty under Section 11AC. The Tribunal's direction for a nominal penalty was highlighted. The redemption fine in lieu of confiscation was deemed unsustainable, leading to its dropping. The penalty imposition of ?10,000 was justified and upheld.

In the final decision, the redemption fine was dropped, and the penalty of ?10,000 was upheld, partially allowing the appellant's appeal. The Department's appeal was rejected. The judgment was pronounced in open court on 16/06/2017.