2018 (2) TMI 1300 - AT - Central Excise

Penalties u/s 11AC and Rule 173Q - inclusion of installation charges in assessable value - brand name - Held that - Considering the magnitude of the dispute and also that this is a second round of litigation, the penalty imposed u/s 11AC will be suffice to meet ends of justice in this case - penalty u/r 173Q is set aside - appeal allowed in part.

Summary

Issues:
1. Adjudication of duty demand and penalties imposed.
2. Dispute regarding duty liability and credit reversal.
3. Applicability of penalties under Section 11AC and Rule 173Q.
4. Appeal for setting aside penalties.

Analysis:

1. The matter involved a second round of adjudication before the Appellate Tribunal CESTAT CHENNAI. The initial order had remanded the issue for fresh adjudication based on the assessee's submissions regarding duty demand, credit availed, and penalty liability. In the impugned order, the adjudicating authority confirmed a duty demand of &8377; 1,78,020 with interest and ordered the recovery of irregularly availed credit amounting to &8377; 5,15,819. Additionally, penalties of &8377; 1,05,696 under Section 11AC and &8377; 3 lakhs under Rule 173Q were imposed.

2. During the hearing, the appellant did not contest the duty demand or credit reversal but sought the setting aside of the imposed penalties. The dispute primarily revolved around the inclusion of installation charges in the assessable value of manufactured goods, brand name issues, and irregular availment of cenvat credit. The appellant argued that the Tribunal had already ruled in their favor on certain issues in the earlier order and that the remaining issues were subject to interpretation, warranting the setting aside of penalties.

3. The respondent argued that the demanded amount pertained to goods removed without payment of duty, justifying the imposition of penalties. After hearing both parties and reviewing the facts, the Tribunal found that penalties under both Section 11AC and Rule 173Q had been imposed. Considering the nature of the dispute and the ongoing litigation, the Tribunal concluded that the penalty under Section 11AC was sufficient to meet the ends of justice in this case. Consequently, the penalty under Rule 173Q was set aside, and the appeal was partly allowed on these terms.

This detailed analysis highlights the key issues of duty demand adjudication, penalty imposition, and the Tribunal's decision to set aside one of the penalties based on the circumstances of the case.