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2018 (11) TMI 1021 - AT - Central ExciseClandestine manufacture and removal - case of Revenue is that the respondent has set up a factory in Arunachal Pradesh, but has not bothered to take registration from jurisdictional Central Excise Authorities - Held that - Even though the area where the respondent s factory is located falls within the Area Based Exemption under the Central Excise Notification No.32-33/99-CE dated 08.07.1999, it is incumbent on the respondent to complete formalities specified in the Notification and claim the benefit of such Area Based Exemption. In the absence of such course of action, the central excise duty becomes payable on the goods manufactured and cleared by the respondent. Demand of Interest and penalty - Held that - Since the central excise duty has been held as payable, and the same has not been paid, the interest applicable under Section 11AB will also required to be paid by the respondent - the conduct of the respondent is to be viewed as suppression of facts and hence the penalty under Section 11AC will also be liable to be paid - interest and penalty upheld. Appeal allowed - decided in favor of Revenue.
Issues:
1. Incorrect legal provision cited for demand confirmation against the respondent. 2. Failure to register the factory and pay Central Excise Duty. 3. Applicability of penalty under Section 11AC. 4. Determination of central excise duty and interest payable. 5. Benefit of Area Based Exemption under Central Excise Notification No.32-33/99-CE. Analysis: 1. The Revenue filed an appeal against the Order-in-Original, challenging the adjudicating authority's decision to determine the value of goods manufactured by the respondent and not impose penalties despite non-compliance with central excise formalities. The Revenue argued that the duty demand confirmation was incorrectly cited under the Central Excise Valuation Rules, 2000, instead of Section 11A of the Central Excise Act, 1944. 2. The adjudicating authority found that the respondent had a factory in Arunachal Pradesh but failed to register it with the Central Excise Authorities. Despite falling within the Area Based Exemption, the respondent did not complete the necessary formalities to claim the exemption, leading to the conclusion that central excise duty was payable on the manufactured and cleared goods. 3. The Revenue contended that due to the respondent's clandestine manufacturing and clearance of goods without registration or payment of central excise duty, penalties under Section 11AC should be imposed. The adjudicating authority refrained from imposing penalties initially, but upon review, it was determined that the respondent's conduct amounted to suppression of facts, justifying the imposition of penalties. 4. The adjudicating authority determined the central excise duty payable by the respondent for the disputed period and ordered the payment of interest under Section 11AB, as the duty remained unpaid. The Order was modified to confirm the demand under Section 11A of the Central Excise Act, 1944, instead of the Central Excise Valuation Rules, 2000. 5. Despite the availability of Area Based Exemption under Central Excise Notification No.32-33/99-CE, the respondent's failure to fulfill the specified formalities rendered them liable to pay central excise duty. The appeal filed by the Revenue was allowed, upholding the demand for central excise duty, interest, and penalties under Section 11AC due to the respondent's non-compliance with registration and exemption claim requirements.
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