2019 (3) TMI 1177 - AT - Central Excise

Goods supplied against International Competitive Bidding (ICB) - Sl. No. 91 of the Central Excise N/N. 06/2006-CE dated 01.03.2006 as amended - denial on the ground that M/s. BHEL sent an e-mail to the appellants stating that their corporate office has informed them about non-eligibility of the Excise Duty exemption on the goods cleared to Mega Power Project certificate issued by North Chennai Power Corporation - Held that - It is very clear that the appellants and/or M/s. BHEL had, on more than one occasion, informed the jurisdictional Superintendent of Central Excise that the clearances of boiler components are being made without payment of duty in terms of Notification No. 06/2006-CE. The appellants therefore were very much under a bona fide belief that they were eligible for the exemption based on the certificates issued by M/s. BHEL. They cannot be faulted that M/s. BHEL took a u-turn on such eligibility and informed them by e-mail at such a period that they were not eligible for such exemption. In any case, based on that e-mail, subsequent to the audit visit and the letter from the jurisdictional Superintendent, the appellants paid up the amounts with interest and informed the fact of the same to the authorities on 30.08.2010. This is definitely a case where the provisions of Section 11A(2B) ibid may very well have been extended to the appellant. Time Limitation - Section 11A(2B) of CEA - Held that - The SCN has been issued almost four years from the date of the audit objection and the payment made by the appellants. Notwithstanding the contentions of the Ld. AR, it is found that the conclusion reached by the adjudicating authority that the appellants had indulged in mis-statement of facts, etc., is contrary to the evidence on record. In fact, this is a base where the benefit of Section 11A(2B) should have been extended to the appellants. Penalty u/s 11AC of CEA - Held that - When the ingredients of Section 11AC ibid are not present at all in this case, the penalty imposed under that Section cannot be sustained and is required to be set aside - penalty set aside. Appeal allowed in part.

Summary

Issues involved:
1. Eligibility for duty exemption under Central Excise Notification No. 06/2006-CE.
2. Imposition of penalty under Section 11AC of the Central Excise Act, 1944.
3. Refund claim rejection on grounds of time-bar.

Analysis:

Eligibility for Duty Exemption:
The appellants, manufacturers of boiler components, cleared goods without duty payment under Sl. No. 91 of Notification No. 06/2006-CE. The Department initially accepted their eligibility but later issued a Show Cause Notice proposing demand of duty, interest, and penalties. The appellants claimed that clearances to M/s. BHEL for the Mega Power Project at Ennore were eligible for exemption. Despite paying the demanded amount and interest, a Show Cause Notice was issued after four years, alleging misstatement and intention to evade duty. The appellants argued that they were under a bona fide belief of exemption based on communications from M/s. BHEL and should not be penalized.

Imposition of Penalty under Section 11AC:
The Department invoked the extended period of limitation for recovery and imposed penalties under Section 11AC. The appellants contended that as they had paid the duty liability along with interest, penalties under Section 11AC should not apply. The Tribunal agreed, finding no grounds for invoking the extended period or alleging suppression or misstatement. The penalty under Section 11AC was set aside as the appellants were not contesting the duty demand but sought relief from penalties.

Refund Claim Rejection:
The appellants filed a refund claim for duty paid, which was rejected as time-barred. The Commissioner (Appeals) upheld the rejection. The appellants did not contest this appeal at the hearing stage, leading to the dismissal of Appeal No. E/465/2012 as not pressed.

In conclusion, the Tribunal partly allowed Appeal No. E/40316/2015 by setting aside the penalty imposed under Section 11AC. Appeal No. E/465/2012 was dismissed as not pressed. The judgment emphasized the appellants' bona fide belief in exemption, the absence of grounds for penalty imposition, and the dismissal of the refund claim appeal due to lack of contestation.