2016 (8) TMI 879 - AT - Central Excise

Imposition of penalty - Rule 25 of the Central Excise Rules, 2002 - cleared SS Pipes and Tubes to other units without payment of duty against letter of invalidation of EPCG licence issued by DGFT - cleared finished goods to 100% EOUs also under CT-3 certificate - paid full duty liability alongwith interest much before issuance of SCN - Held that - no malafide could be attributed in the present case against the appellant. They have intimated the non-duty paid clearances in all the three instances to the Jurisdictional officer. These clearances were indicated in the ER-1 though under the wrong category. The fact that full duty amount alongwith interest has been paid well before the issue of notice and the notice was issued covering the normal period only will go to show that the penalty in the present case may not be warranted. In fact the case could have been closed under the provisions of sub-Section (2B) of Section 11A of Central Excise Act, 1944. - Decided in favour of appellant

Summary

Issues:
Imposition of penalty under Rule 21 of the Central Excise Rules, 2002.

Analysis:
The appellant, engaged in manufacturing SS Pipes and Tubes, cleared dutiable items without payment of duty against an invalid EPCG license and to 100% EOUs under a CT-3 certificate. The Commissioner confirmed the demand for duty and interest, and imposed a penalty of ?10,00,000 under Rule 25 of Central Excise Rules, 2002. The appeal was solely against this penalty.

Discussion:
The appellant argued they believed clearances under the invalid EPCG license could be made without duty payment, informing the Jurisdictional Superintendent each time. The clearances were shown under the wrong category in their returns. The Department's inquiry led to the appellant paying the full duty liability and interest before the show cause notice was issued. No fraud or suppression was alleged in the notice. The Tribunal noted the appellant's cooperation and lack of malafide intent.

Decision:
After considering the facts, the Tribunal found no malafide intent on the appellant's part. The penalty was set aside, and the appeal was allowed. The judgment was pronounced on 02/6/2016.