2018 (9) TMI 1490 - AT - Central Excise

Penalty - demand of differential Central Excise duty by including the VAT subsidy amounts received by the appellants from the Rajasthan Government - Held that - The Tribunal in GREENLAM INDUSTRIES LTD 2018 (4) TMI 1552 - CESTAT NEW DELHI have set aside the demand for such differential duty, where it was held that There is no justification for inclusion in the assessable value, the VAT amounts paid by the assessee using VAT 37B Challans. The cases of both the appellants in the present appeals, stand decided in favour of the appellants - Once the demands for differential duty have been set aside, there is no justification for penalties which are also to be set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
Challenge to Order-in-Appeal No. 78/2017 and Order-in-Appeal No. 79/2017 regarding demand of Central Excise duty on VAT subsidy amounts received from Rajasthan Government, penalty imposition by Commissioner (Appeals), appeal against penalties.

Analysis:
The appeals in question contested the decisions in Order-in-Appeal No. 78/2017 and Order-in-Appeal No. 79/2017, which upheld the demand of Central Excise duty on VAT subsidy amounts received by the appellants from the Rajasthan Government. The Original Authority had also imposed Central Excise duty, interest, and a 50% penalty. The Commissioner (Appeals) allowed the appeals filed by Revenue, specifically addressing the penalty issue. The appellants challenged these decisions, leading to the present appeals.

During the hearing, the appellants' advocate argued that the Tribunal had previously ruled in favor of the appellants in similar cases involving the demand of Central Excise duty on VAT subsidy amounts. The advocate highlighted that separate appeals against the impugned Orders-in-Appeal had been successful, as evidenced by the Final Order No. 51427-51514/2018 dated 11th April, 2018, where the cases of the two appellants were specifically mentioned. Given the Tribunal's previous decisions setting aside the demand for differential Central Excise duty, the advocate contended that the penalties should also be nullified, and consequently, the present appeals should be allowed in favor of the appellants.

On the other hand, the Departmental Representative (DR) reiterated the findings in the Order-in-Appeal, maintaining the stance taken by the Revenue. The core issue in this case revolved around the demand for differential Central Excise duty, specifically related to the inclusion of VAT subsidy amounts received from the Rajasthan Government. The Tribunal's Final Order had already ruled in favor of the appellants, setting aside the demand for such differential duty. Consequently, since the demands for differential duty were overturned, there was no basis for the penalties imposed, which should also be set aside.

In light of the arguments presented and the Tribunal's previous rulings, the appeals were allowed, with the Tribunal deciding in favor of the appellants. The judgment emphasized that once the demands for differential duty were invalidated, the penalties imposed were not justified and thus were also set aside.