2015 (10) TMI 1672 - AT - Central Excise

Denial of CENVAT Credit - Imposition of penalty - Whether the appellant is liable to penalty for clearance of goods during the period July 2003 to March 2004, without payment of duty - Held that - The appellants are not challenging the duty element but submit that as they were under a bona fide belief that with the death of proprietor of the unit, the manufacturing unit had stopped working, they cleared the goods without payment of duty. It is also their stand that they did not avail any benefit of CENVAT credit or duty paid on the inputs and used in the manufacture of such exempted goods. I find that inasmuch as all the goods were cleared on paper transactions and all the documents were maintained by the appellant, no malafide can be attributed to them. There could be a bona fide belief on their part that the new unit with a new proprietrix is entitled to fresh exemption. As such I do not consider this to be a case ofmala fide intention and by extending the benefit of doubt to the appellant, set aside the imposition of penalty upon them - Decided in favour of assessee.

Summary

Issues: Liability for penalty on clearance of goods without duty payment from July 2003 to March 2004.

Analysis:
1. Facts and Background: The appellants, manufacturers of motor vehicle parts, availed duty benefit under Notification NO.9/2003 but faced issues due to the sudden demise of the proprietor, leading to a change in ownership to the deceased's wife. The appellants continued operations, ceased temporarily, and resumed manufacturing under the same name, clearing goods without paying duty, resulting in a demand notice for duty of &8377; 9,24,955/-.

2. Challenge and Contentions: The appellant contested the penalty imposition, asserting a genuine belief that the new unit under the same name with the new owner qualified for the duty exemption. The appellant clarified that they did not utilize CENVAT credit or duty paid on inputs for the cleared goods, emphasizing a lack of malafide intent and raising a plea of limitation.

3. Decision and Reasoning: The primary issue revolved around the liability for penalty on goods cleared without duty payment. The appellant did not dispute the duty and interest but argued their genuine belief in the new unit's eligibility for exemption post the proprietor's demise. The tribunal acknowledged the absence of malafide intent, considering the maintained documents and the possibility of a bona fide misunderstanding regarding the entitlement to a fresh exemption. Consequently, the penalty imposition was set aside, granting the appellant the benefit of the doubt, while confirming the duty and interest amounts.

4. Conclusion: The appellate tribunal, after thorough consideration, ruled in favor of the appellant, absolving them of the penalty for clearing goods without duty payment from July 2003 to March 2004. The decision highlighted the importance of genuine belief and lack of malafide intent in such cases, ultimately emphasizing the need for a fair assessment of circumstances to determine liability accurately.