2001 (4) TMI 423 - AT - Central Excise

Summary

Issues: Liability of goods to duty, imposition of penalty, bona fide belief of appellant, manufacturing process involving dehydration, misrepresentation to department, confirmation of penalty.

Liability of goods to duty:
The case involved a dispute regarding the liability of potato chips to central excise duty. The appellant argued that potato chips did not fall within the scope of the Central Excise tariff. However, the department disagreed and issued a show cause notice for non-payment of duty on cleared potato chips. The appellant eventually deposited the duty but contested the penalty imposed.

Imposition of penalty:
The main contention of the appellant was the imposition of a penalty of Rs. 25,000 for allegedly misleading the department regarding the manufacturing process of potato chips. The appellant claimed a bona fide belief that no duty was payable on the chips and emphasized that it acted in good faith.

Bona fide belief of appellant:
The appellant maintained that it genuinely believed that no duty was payable on the potato chips and had informed the department accordingly. The Assistant Collector acknowledged the appellant's bona fide belief but still imposed the penalty.

Manufacturing process involving dehydration:
The appellant failed to provide conclusive evidence that the manufacturing process of potato chips solely involved dehydration, as claimed. The tribunal noted that the process actually included frying potato slices in edible oil, contradicting the appellant's assertion.

Misrepresentation to department:
The tribunal found that the appellant attempted to mislead the department by emphasizing dehydration as the sole process involved in manufacturing potato chips. This deliberate misrepresentation led to a penalty being imposed due to the misleading nature of the appellant's communication.

Confirmation of penalty:
Despite the appellant's argument of acting in good faith, the tribunal upheld the penalty imposed by the Assistant Collector. The tribunal criticized the appellant's attempt to mislead the department and confirmed the penalty of Rs. 25,000, emphasizing the lack of genuine belief in the non-liability of goods to duty.

In conclusion, the tribunal dismissed the appeal and confirmed the penalty, highlighting the lack of evidence supporting the appellant's claim of a bona fide belief in the non-liability of potato chips to duty. The judgment underscored the importance of transparency and accuracy in dealings with tax authorities to avoid penalties for misrepresentation.