2004 (1) TMI 177 - AT - Central Excise

Summary

Issues: Appeal against setting aside penalty imposed by adjudicating authority based on incorrect classification declaration by assessee.

In this judgment by the Appellate Tribunal CESTAT, Bangalore, the issue revolved around the penalty imposed on the assessee by the adjudicating authority for filing an incorrect classification declaration. The Commissioner (Appeals) set aside the penalty, leading to the appeal by the Revenue. The Tribunal noted that the proceedings began with a classification declaration by the assessee, which was later rejected by the adjudicating authority, who also imposed a penalty of Rs. 2,00,000/- on the assessee. The Commissioner (Appeals) held that the assessee cannot be penalized for making a wrong classification, citing case law against the imposition of any penalty in such cases.

Upon reviewing the records and hearing both sides, the Tribunal considered the issue in light of previous decisions. The counsel for the assessee referred to the case of S. Narendra Kumar & Co. v. CCE, Mumbai-II, where it was held that no penalty is imposable for filing an incorrect classification. The Tribunal emphasized that a classification declaration merely indicates the proposed classification by the assessee, which may be erroneous. The revenue authorities have the discretion to correct the classification and order payment accordingly. The purpose of requiring a classification declaration is to facilitate this process, and proposing an incorrect classification does not warrant a penalty. The Tribunal agreed with the view taken by the Commissioner that no penalty should be imposed in such cases.

Ultimately, the appeal by the Revenue was deemed to fail, and it was rejected by the Tribunal. The judgment reaffirmed the legal position that an assessee should not be penalized for filing an incorrect classification declaration, as it does not constitute an offense justifying the imposition of a penalty.