2015 (5) TMI 408 - AT - Central Excise

Interest u/s 11AB - Penalty u/s 11AC - Held that - There is no dispute about the leviability of the duty. Respondent had already paid duty at the time of investigation itself. Penalty under Section 11AC is leviable where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reasons of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty. Keeping in view nature of the dispute as contended by the appellant as also his conduct right from the time of investigation and the nature of activities in which they are engaged, we do no find any ingredient as enumerated under Section 11AC is satisfied. In view of the said position we do not find any reason to levy the penalty under Section 11AC. We also find that the in this case demand is for the period 1998 onwards and at the relevant time provision under Section 11AB were similar to that 11AC. Accordingly, in our view for the same reasons, interest is also not chargeable - Decided against Revenue.

Summary

Issues:
- Whether the appellants are liable to pay Central Excise duty for manufacturing and clearing wooden/steel furniture without payment?
- Whether the appellants can be considered as manufacturers or not?
- Whether the penalty under Section 11AC and interest under old Section 11AB are applicable in this case?

Analysis:
1. The appellants were engaged in manufacturing excisable goods without paying Central Excise duty, specifically wooden/steel furniture. They had another unit engaged in similar activities and were supplying the furniture to schools and colleges they owned.

2. The contention that the goods were manufactured by independent contractors was rejected as the workshops belonged to the appellants, and the entire process was under their control and supervision. The first appellate authority set aside the interest and penalty but upheld the duty liability.

3. The Revenue appealed against setting aside the interest and penalty. The argument was made that the penalty under Section 11AC is applicable when duty has not been paid due to fraud, collusion, or wilful misstatement. However, considering the nature of the dispute and the activities of the appellants, the tribunal found no grounds for levying the penalty.

4. The tribunal noted that the duty had already been paid by the respondent during the investigation. The only issue was regarding the interest under Section 11AB and penalty under Section 11AC. Since the conditions for penalty imposition were not met and the nature of the dispute did not warrant it, the tribunal dismissed the appeal by the Revenue.

5. The tribunal concluded that neither the penalty under Section 11AC nor the interest under old Section 11AB were chargeable in this case. The decision was based on the nature of the dispute, the conduct of the appellant, and the similarity of provisions between Section 11AC and 11AB during the relevant period. The appeal by the Revenue was dismissed, and the cross-objection was disposed of accordingly.