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2018 (7) TMI 244 - AT - Central ExciseBenefit of N/N. 3/2004-CE dated 8.1.2004 - Clearance of Cement - The department was of the view that appellants are not eligible for the benefit of Notification and have mis-declared the clearances in their ER-1 returns - Held that - The goods which are exempted as per the notification does not include cement. Therefore, this contention of the appellant that cement is impliedly exempted as per notification does not hold water - When the notification per se does not grant any exemption to cement, the certificate issued by the District Collector cannot exempt the goods from payment of duty - demand of duty with Interest upheld. Penalty u/s 11AC - Held that - The appellant was under bonafide belief that the certificate was valid for claiming exemption - the major quantity of cement supplied in the exempted category are supplies to SEZ, by oversight the returns reflected that the clearances are made to SEZ. That this was not done with an intent to evade payment of duty - penalty not warranted. Appeal allowed in part.
Issues:
Claim of exemption under Notification No.3/2004-CE for cement clearance to SEZ, Mis-declaration in ER-1 returns, Demand of duty, Interest, Imposition of penalty under section 11AC. Analysis: The appellants, engaged in cement manufacturing, claimed exemption under Notification No.3/2004-CE for clearing cement to SEZ but were accused of mis-declaring clearances in their ER-1 returns. The department issued a show cause notice for duty demand, interest, and penalty. The original authority and Commissioner (Appeals) upheld the demand and penalty, leading to the appeal. The appellant argued that based on a certificate from a contractor, they believed the cement supplied for a water treatment plant was exempt. However, the department contended that cement was not explicitly exempted under the notification, and the contractor's certificate did not grant exemption. The Tribunal found the appellant's argument weak, stating that the notification did not exempt cement, hence rejecting the claim of implied exemption. Regarding the penalty under section 11AC, the appellant claimed no intent to evade duty, citing reliance on the contractor's certificate in good faith. They explained the misrepresentation in returns was inadvertent, as most cement supplies were duty-exempt to SEZ. The Tribunal acknowledged the appellant's genuine belief in the certificate's validity and overturned the penalty, deeming it unwarranted due to the lack of intent to evade duty. Conclusively, the Tribunal modified the impugned order by setting aside the penalty under section 11AC while upholding the duty demand and interest. The appeal was partly allowed on these terms, emphasizing the absence of fraudulent intent in the appellant's actions.
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