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TMI Blog2007 (6) TMI 417X X X X Extracts X X X X X X X X Extracts X X X X ..... e impugned order, the Commissioner demanded duty of Rs. 34,50,307/- under proviso to Section 11A, imposed penalty of Rs. 27,56,937.95 on BBA under Section 11 AC and another penalty of Rs. 1.00 lakh under Rule 173Q on BBA. (i) Appeal No. E/327/2000. In this appeal BBA seeks to set aside the impugned order. Facts of the case in brief are that BBA manufactured flavours and fragrances using aromatic chemicals at its unit at Chennai. BBA stored aromatic chemicals in their Raw Material Store (RMS) finished products in their Finished Products Store (FPS) at their Chennai unit. During the period 1-4-94 to 25-10-98, they removed aromatic chemicals from RMS without payment of duty to their sister unit at Chittoor and to M/s. Akash Aromatic Pvt. L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollows:- Having regard to the fact that the offence occurred due to systems failure and lack of proper control by BBA. I do not find any personal involvement of Shri Arun Dewoor, Managing Director of the Company in the offence and hence I am not inclined to impose any penalty on him as proposed in the Show Cause Notice. On the same reasoning he imposed a nominal penalty of Rs. 1.00 lakh on BBA. 2. The Ld Sr. Counsel and the Counsel appearing for the appellants reiterated the following grounds taken in the appeal. The demand was barred by limitation as the adjudicating authority himself had found that the impugned clearances had taken place owing to system failure and refrained from imposing any penalty on the Managing Director. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d from a bona fide belief that the offender was not liable to act in the manner prescribed by the statute. In view of these observations endorsed by the Apex Court also in the Akbar Badruddin Jiwani case [1990 (47) E.L.T. 161 (S.C.)], no penalty was imposable on the appellants. They further cited the following case law in support of their pleas. 1. Punjab Tractors Ltd. v. CCE - 2005 (181) E.L.T. 380 (S.C.) 2. Super Forgings and Steel Ltd. v. CCE - 2007 (208) E.L.T. 153 (Tri.-Cal.) 3. Sundaram Industries v. CCE, Madurai - 2007 (209) E.L.T. 369 (Tri.-Che.) In the orders of the Tribunal citied it was decided that when the clearances were to sister unit there was a situation of revenue neutrality and the assessee did no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ked as non-excisable. Duty was not paid for such clearances, unaware of the implications from the excise angle. Such clearances were a negligible one percent of the total clearances. From the adjudication order we find that the impugned clearances without payment of duty had been made owing to system failure and not with conscious intention to evade payment of duty. Therefore, the demand for the period beyond the normal period is barred by limitation. As the ingredients of suppression, wilful misrepresentation, or fraud were absent in the impugned transactions penalty imposed under Section 11 AC is liable to set aside. Following the ratio of the orders of the Tribunal and apex Court cited by the appellants we are inclined to vacate the pena ..... X X X X Extracts X X X X X X X X Extracts X X X X
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