2015 (9) TMI 1203 - AT - Central Excise

Applicable basic excise duty rate - Applicability of education cess and secondary and higher education cess third time - Held that - There is no dispute that the appellant has applied the incorrect rate of duty. However, it is the submission that they have been indicating the rate of duty applied by them in the monthly returns and the department never pointed out that the duty rate has gone up and so they are required to pay higher rate of duty and as soon as this was pointed out, they immediately paid the differential duty. Under the circumstances, there is no wilful misstatement on the part of the appellant. There is no suppression of fact and none of the ingredients to imposed penalty under Section 11AC are present in the case. Under the circumstances, penalty imposed under Section 11AC corresponding to the first issue is set aside. Issue is decided in appellant s favour in the case of Kumar Arch Tech Pvt. Ltd. (2013 (4) TMI 482 - CESTAT NEW DELHI) and in view of this position, the third time demand relating to education cess and secondary and higher education cess no more survives and the demand on this count is, therefore, set aside. Since the demand has been set aside, no penalty is imposable on this count. - Decided in favour of assessee.

Summary

Issues Involved:
1. Applicable basic excise duty rate.
2. Applicability of education cess and secondary and higher education cess.

Analysis:

Issue 1: Applicable basic excise duty rate
The appellant, a 100% EOU, cleared goods in DTA but inadvertently paid duty based on an outdated rate of 7.5% instead of the increased rate. The appellant acknowledged the mistake and promptly paid the differential duty upon realization. The appellant argued that they had consistently disclosed the duty rate in their monthly returns, and the department failed to notify them of the rate change. The appellant contended that there was no intentional misstatement or fact suppression, thus penalty under Section 11AC was unwarranted. The tribunal agreed, noting the absence of deliberate wrongdoing or factual concealment. Consequently, the penalty under Section 11AC for the first issue was set aside.

Issue 2: Applicability of education cess and secondary and higher education cess
The second issue revolved around whether education cess and secondary and higher education cess could be paid from the basic excise duty. The appellant cited a precedent set by a Larger Bench decision in Kumar Arch Tech Pvt. Ltd. vs. CCE, Jaipur-II, which resolved the issue favorably for the appellant. As a result, the demand related to these cesses was annulled. Since the demand was quashed, no penalty was levied. The tribunal emphasized that the question of debiting the amount from basic excise duty was irrelevant given the circumstances. The appellant also agreed to pay interest on the delayed duty payment. Consequently, the appeal was allowed in favor of the appellant.

This detailed analysis of the judgment highlights the issues, arguments presented by both parties, tribunal's considerations, and the final decision rendered on each issue, ensuring a comprehensive understanding of the legal aspects involved in the case.