2018 (1) TMI 468 - AT - Central Excise

Penalty - CENVAT credit - removal of capital goods without payment of duty - Held that - admittedly what was paid by Thane Unit was available as credit to their Ambernath unit, thus leading to a Revenue neutral situation. If that be so, the appellant cannot be held guilty of any malafide with the intention to evade payment of duty - initiation of penal provision against the appellant was neither warranted nor justified - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Imposition of penalties on the appellant for not paying duty on certain capital goods during the shifting of their factory.
2. Whether the appellant acted with malafide intention to evade payment of duty.
3. Application of penal provisions under Section 11A (2B) of the Central Excise Act, 1944.

Analysis:
1. The appellant, engaged in medicine manufacturing, shifted their factory from Thane to Ambernath. While most capital goods were cleared with duty payment, a D.G. set not shifted attracted audit objection. The appellant paid duty with interest post-audit. The challenge was against the penalties imposed for non-payment of duty.
2. The appellant contended that the shift was revenue-neutral as Thane Unit's payments were credited to Ambernath Unit. Regarding the D.G. set, they believed no duty was due but paid to avoid disputes. The appellant argued against malafide intent for penalty imposition.
3. The Revenue argued malafide intent due to selective duty payment on capital goods. The Tribunal found the shift was revenue-neutral, absolving the appellant of malafide intent. The delayed penalty notice post-duty payment violated Section 11A (2B), indicating Revenue uncertainty. Consequently, the penalties were set aside, allowing all three appeals.