2017 (6) TMI 810 - AT - Central Excise

Penalty - Interpretation of statute - N/N. 8/2003-CE dt. 1.3.2003 - amendment carried out in the notification w.e.f. 1.4.2003 - short payment of duty - extended period of limitation - Held that - no valid reason has been cited for invoking the suppression clause of Section 11A - the appellant has been filing periodical returns in Form E.R-1 to the department and hence the grounds of suppression cannot be alleged against the appellant. In any case, the amendment to N/N. 8/2003 resulted in significant change in the method of computing aggregate value of clearance of excisable goods for home consumption. In view of this major change, that there were doubts and uncertainties in the financial year preceding the month. Penalties set aside - demand of duty with interest upheld - appeal allowed - decided partly in favor of assessee.

Summary

Issues:
Interpretation of SSI exemption notification No.8/2003-CE, Duty liability, Bonafide mistake defense, Penalty imposition under Section 11AC, Validity of demand for duty, Suppression clause invocation.

Analysis:
The appeal challenged the demand of excise duty and penalty imposed under Section 11AC due to the appellant's ineligibility for the SSI exemption under Notification No.8/2003-CE. The appellant manufactured various items, including ball point pens and stamps, cleared duty-free under the notification. The amendment to the notification in 2003 changed the method of computing aggregate value of clearances, rendering the appellant ineligible for the exemption in the subsequent financial year. The department demanded duty for the period when the appellant exceeded the threshold value. The original authority and Commissioner (Appeals) upheld the demand and penalty.

During the hearing, the appellant did not dispute the duty liability but claimed non-payment was due to a genuine mistake in interpreting the amended provisions of the notification. The appellant sought to set aside the penalty. The Revenue supported the original order. The Tribunal noted that the demand arose from the amendment in the notification, resulting in the appellant losing the SSI benefit. However, the Tribunal found no valid reason for invoking the suppression clause under Section 11A, as the appellant had regularly filed returns. The Tribunal acknowledged the significant change in computing clearances due to the amendment, leading to doubts and uncertainties. Consequently, the penalty under Section 11AC was deemed unjustified and set aside. The Tribunal upheld the differential duty demand and interest.

In conclusion, the Tribunal partially allowed the appeal, setting aside the penalty but upholding the duty demand and interest. The decision was pronounced on 14.06.2017.