2018 (3) TMI 836 - AT - Central Excise

Benefit of N/N. 64/95-C, dated 16.03.1995 - Revenue authorities were of the view that these goods which are cleared by appellant claiming the benefit of N/N. 64/95-C cannot be considered as ship builders as the goods were used for construction of ships by Indian Navy - Held that - for the clearances made from 11.04.2002 to 28.02.2003 were done so, without such certificate, hence claiming the benefit of N/N. 25/2002-CE, dated 11.4.2002 does not arise - benefit rightly denied. Time limitation - Held that - the demand of duty liability for the period beyond one year from the date of issuance of show cause notice is hit by limitation and demand needs to be set aside - Lower authorities will recalculate the demand within the limitation period and inform the appellant to discharge the same alongwith interest. Penalty - Rule 25 of CER 2002 - Held that - the appellant being a Government organization, could not have had any intention to remove the goods without payment of duty and more specifically when they have subsequent clearances, produced various certificates issued by Navel authorities indicating that these goods are used as stores in the ship - This could be the mis-interpretation and mis-conception of N/N. 64/95-C. - penalty set aside. Appeal allowed in part.

Summary

Issues:
1. Benefit of notification No. 64/95-C for goods supplied to Indian Navy.
2. Eligibility for the benefit of notification No. 25/2002-CE.
3. Imposition of penalties under different sections of the Central Excise Act, 1944.
4. Consideration of limitation period for demanding duty liability.
5. Applicability of penalties under Rule 25 of Central Excise Rules, 2002.

Analysis:

Issue 1: Benefit of notification No. 64/95-C for goods supplied to Indian Navy
The appellant claimed the benefit of notification No. 64/95-C for electronic items supplied to the Indian Navy. However, the Revenue authorities contended that the goods were not eligible for this benefit as they were used for ship construction by the Indian Navy. The Tribunal previously held that the benefit of this notification was not applicable to the appellant. As there were no appeals against this decision, the claim for this benefit was rejected.

Issue 2: Eligibility for the benefit of notification No. 25/2002-CE
The appellant argued that they were eligible for the benefit of notification No. 25/2002-CE for goods supplied to the Indian Navy. The Tribunal found that the conditions for this benefit required a certificate signed by a specified rank officer of the Indian Navy, which was not provided by the appellant. Therefore, the claim for this benefit was also rejected.

Issue 3: Imposition of penalties under different sections
The adjudicating authority imposed a penalty under Rule 25 of the Central Excise Rules, 2002, but dropped the penalty under section 11 AC of the Central Excise Act, 1944. The Tribunal held that the penalty under Rule 25 should not be imposed on the appellant, considering their misunderstanding of the notification and the certificates produced for subsequent clearances.

Issue 4: Consideration of limitation period for demanding duty liability
The Tribunal found that the demand of duty liability beyond one year from the date of the show cause notice was beyond the limitation period. Citing the Nizam Sugar Factory case, the Tribunal set aside the demand beyond the limitation period and directed the lower authorities to recalculate the demand within the limitation period.

Issue 5: Applicability of penalties under Rule 25 of Central Excise Rules, 2002
The Tribunal concluded that the penalty under Rule 25 should not be imposed on the appellant, given their genuine misunderstanding and the certificates provided for subsequent clearances. Therefore, the penalty under Rule 25 was set aside.

In conclusion, the Tribunal disposed of the appeal based on the above considerations and decisions regarding the benefits, penalties, and limitation period involved in the case.