2013 (2) TMI 570 - AT - Central Excise

Non payment of excise duty - wrongly availing the exemption under Notification No. 108/95-CE dated 28.08.1995 on the basis of forge certificate - seeking waiver of pre- deposit - Held that - The appellants cleared the subject goods without payment of excise duty under the exemption notification on the strength of the requisite certificate issued by the Executive Head of the Project Implementing Authority i.e. ICICI Bank purportedly countersigned by the Joint Secretary to the Government of India in the Ministry of Finance. It is not the case of the Revenue that the appellants while clearing the subject goods under exemption notification were aware of forgery if any in respect of the signature of the Joint Secretary or that they were aware that Finance Ministry was not the line Ministry for the purpose of the project undertaken by M/s TEIL or the appellants were in conspiracy with M/s TEIL. Thus, prima-facie bonafide of the appellants clearing the subject goods under exemption Notification No. 108/95-CE dated 28.08.95 without the payment of excise duty cannot be doubted. Whether the liability to pay the excise duty would of the certificate issuing authority i.e. ICICI Bank or the main assessee who receive excise free goods (in this case M/s TEIL) or the manufacturer of the subject goods who bonafide cleared them availing the benefit of exemption notification on the basis of forged certificate - Held that - As this question requires serious consideration because under the normal commercial practice if a requisite certificate is produced alongwith the purchase order the manufacturer/ supplier is prima-facie expected to accept the correctness of certificate and is not expected to first verify the genuineness of certificate before availing the exemption under the notification. Thus, there is a prima-facie case in favour of the appellants. Otherwise also in show cause notice served on the appellants it is writen that M/s TEIL the main assessee before the issue of the show cause notice had deposited the amount of Rs.2,50,38,883/- which was approximately equal to the central excise duty involved on entire quantity of excisable goods received by them duty free on the strength of invalid certificate from various manufacturer including the appellants. From this, it is prima-facie clear that duty amount has already been paid to the Department and the interest of the Revenue is secured - the appellants have made a prima-facie case to justify the waiver of condition of pre-deposit, accordingly, the stay applications allowed - Appeals be listed in due course.

Summary

Issues involved:
Determining eligibility for exemption from excise duty under Notification No. 108/95-CE dated 28.08.1995 based on forged certificates.

Detailed Analysis:
1. The issue for determination in this case revolves around whether the appellants rightfully availed the benefit of exemption from excise duty under Notification No. 108/95-CE dated 28.08.1995. The Department alleged that the certificates used for seeking exemption were forged, as they lacked the necessary signatures and approvals. The Department contended that the appellants, along with M/s TEIL, were not eligible for the exemption due to the invalid certificates.

2. The appellants argued that they cleared goods without excise duty payment based on certificates issued by the Project Implementing Authority, purportedly signed by the Joint Secretary to the Ministry of Finance. The appellants claimed they were unaware of any forgery and should not be penalized for it. They also highlighted that M/s TEIL had deposited the entire excise duty amount, ensuring the revenue's interest was protected. The appellants sought a waiver of the pre-deposit condition for duty demand, interest, and penalty.

3. The Revenue strongly opposed the application, asserting that the forged certificates rendered the appellants ineligible for the exemption. The Revenue argued that the duty demand confirmed by the Commissioner was justified. Additionally, the Revenue stated that the amount deposited by M/s TEIL had been utilized against penalties, implying that the duty confirmed against the appellants remained unpaid.

4. The Tribunal considered both parties' contentions and examined the facts. It noted that the appellants acted in good faith based on the certificates provided, without knowledge of any forgery. The Tribunal emphasized that the appellants were not involved in any conspiracy with M/s TEIL. The Tribunal also observed that M/s TEIL had deposited an amount equivalent to the excise duty involved, indicating that the duty amount had been paid to the Department, securing the revenue's interest.

5. Based on the facts and circumstances, the Tribunal found that the appellants had a prima facie case for waiving the pre-deposit condition for duty demand, interest, and penalty. Consequently, the Tribunal allowed the stay applications, dispensing with the pre-deposit condition and staying the recovery of duty demand, interest, and penalty until the appeals were disposed of. The Tribunal directed the appeals to be listed for further proceedings.

This detailed analysis of the judgment highlights the key legal issues, arguments presented by both sides, and the Tribunal's reasoning leading to the decision to waive the pre-deposit condition for the appellants.