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2023 (5) TMI 377 - AT - Central ExcisePenalty u/r 26 of CER, 2002 - Applicability of Rule 10A on goods were manufactured on job work basis on the material supplied by the principal manufacturer - existence of mens rea - HELD THAT - On perusal of the Commissioner (Appeals) order, it is noticed that allegations of knowledge concerning existence of legal provision namely the applicability of Rule, 10A of the Central Excise Valuation Rules, 2000 and the provision of penalty for its britches is made against these Appellants while confirming penalty under Section 26 of the Central Excise Rules, 2002. This being the only allegation available against the Appellants and having regard to the fact that the present Appellants, if applied under the Sabka Vishwas (Legacy Dispute Resolution) Scheme Rules, 2019, would have paid nil liability in view of the relief available to them under Section 124(i)(b) of the Finance Act, 1994 dealing with Sabka Vishwas (Legacy Dispute Resolution) Scheme Rules 2019, vis-a-vis the clarificatory Circular No. 1071/4/2019-CX.8 dated 27.08.2019. Appeal allowed.
Issues involved:
1. Demand raised against vendors under Rule 10 of the Central Excise Valuation Rules, 2000. 2. Legality of the rejection of appeals by the Commissioner (Appeals). 3. Application of Rule 10A in the case of finished goods manufactured by vendors. 4. Settlement under the Sabka Vishwas (Legacy Dispute Resolution) Scheme Rules, 2019. 5. Imposition of penalty under Rule 26 of the Central Excise Rules, 2002. Analysis: 1. The appeals involved a demand raised against vendors under Rule 10 of the Central Excise Valuation Rules, 2000. The duty demand, interest, and penalties were confirmed against the vendors, including penalties against the main Appellant. Efforts before the Commissioner (Appeals) were unsuccessful, leading to the challenge of the rejection of appeals in the Tribunal. 2. The main contention revolved around the application of Rule 10A concerning the manufacturing process of finished goods by vendors. The Appellant argued that Rule 10, not Rule 10A, should apply since the finished goods were manufactured by vendors and supplied to the main Appellant. The absence of mens rea on the part of the Appellant was highlighted to contest the penalty under Rule 26 of the CENVAT Credit Rules, 2004. 3. Settlement under the Sabka Vishwas (Legacy Dispute Resolution) Scheme Rules, 2019 played a crucial role in some of the appeals. The Tribunal dismissed two appeals as deemed withdrawn due to settlements made under the Scheme, affecting the continuation of those appeals. 4. In cases where demands were settled under the Sabka Vishwas Scheme, the focus shifted to the imposition of penalties under Rule 26. The Appellant argued against the penalties, citing legal provisions and previous judicial decisions. The Tribunal considered the allegations of knowledge and the relief available under the Scheme, leading to the setting aside of penalties imposed by the Commissioner (Appeals). 5. Ultimately, the Tribunal allowed certain appeals and set aside the orders passed by the Commissioner of Central Excise (Appeals). Appeals were dismissed as deemed withdrawn due to settlements under the Sabka Vishwas Scheme. The Tribunal's decision was based on the legal provisions, settlements under the Scheme, and the absence of merit in imposing penalties in specific cases. This comprehensive analysis covers the various issues addressed in the judgment, highlighting the legal arguments, settlements under the Scheme, and the Tribunal's decisions regarding penalties and appeal outcomes.
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