2018 (8) TMI 1088 - AT - Central Excise

Area Based Exemption - suppression of facts - case of Revenue is that since the Respondent was aware of the fact that the VIP Industries, Haridwar Unit was availing area based exemption, they continued to clear the goods after carrying out job work, without payment of duty, thus, there has been suppression of fact on the part of the respondent - Held that - There was a bonafide mistake on their part, in as much as, the raw materials had been received against job work challans, which was earlier carried out in the same manner for the Nasik Unit, hence, there was little scope to change the procedure and clear the job worked goods, on payment of duty, to Haridwar Unit - The Ld. Adjudicating authority has rightly appreciated evidences on record and observed that there has been no suppression of fact nor any misdeclaration on the part of the respondent in not discharging duty during the period April 2006 to July 2010. Appeal dismissed - decided against Revenue.

Summary

Issues:
Revenue's appeal against dropping of penalty under section 11AC of Central Excise Act, 1944 by the Ld. Commissioner.

Analysis:
The case involved an appeal by the Revenue against the dropping of penalty under section 11AC of the Central Excise Act, 1944 by the Ld. Commissioner. The Respondent, job workers for M/S VIP Industries, cleared goods to the Haridwar Unit, which had area-based duty exemption. The Respondent voluntarily paid the total duty amount with interest for the period in question after realizing the mistake. The Revenue argued that penalty should be imposed under section 11AC for failure to discharge appropriate duty continuously for four years due to suppression of facts. The Respondent contended that they rectified the error voluntarily before any departmental intervention, thus falling under section 11A(2B) of the Act. The Tribunal examined the job-work and subsidiary challans, finding a genuine mistake by the Respondent due to historical practices with the Nasik Unit. The Adjudicating authority correctly found no suppression of facts or misdeclaration by the Respondent during the relevant period. Consequently, the Tribunal upheld the Ld. Commissioner's decision, rejecting the Revenue's appeal.

Conclusion:
The Tribunal's detailed analysis concluded that the Respondent rectified the duty payment error voluntarily, without any intention to suppress facts or evade duty. The historical practice with the Nasik Unit contributed to the mistake, justifying the non-imposition of penalty under section 11AC. The decision highlighted the importance of assessing each case's circumstances to determine liability accurately.