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TMI Blog2011 (3) TMI 134X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the notification - Thus, it may not be a case of deliberate evasion of duty - While the Tribunal rightly rejected the claim of the assessee that exemption was applicable, the setting aside of penalty cannot be held to be illegal - Levy of penalty is not automatic merely because an exemption was wrongly availed, even when plea of the assessee is found to be erroneous. Held that: view taken by the Tribunal that though interpretation of the assessee was erroneous, it did not lack bonafides and in such a situation, levy of penalty was not called for, is a possible view - The appeals are dismissed. - C.E.A. No. 228 of 2010 (O & M) and CEA Nos. 231, 233-234, 236, 238, 242-243, 246, 248-249, 252, 259-261, 263-264, 267, 269, 271, 276, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otice was issued to the assessee for recovery of duty with interest and penalty. Vide Order-in-Original dated 5.1.2004, the Adjudicating Authority confirmed the demand of duty with interest and penalty which was upheld by the Order-in-Appeal dated 31.8.2004. On further appeal of the assessee, the penalty was set aside while demand of duty with interest was upheld. The Tribunal observed:- 49. As regards the point in relation to penalty imposed by the lower authorities in most of the cases, needless to say that matter involved the issue relating to the interpretation of the notification and, therefore, the appellants are justified in contending that there was no case for imposition of penalty. Therefore, in such circumstances, we do not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion created a fiction on treating the exempted inputs to be duty paid inputs. Though in Dhiren Chemical Industries view taken in Usha Martin Industries was disapproved, the assessee continued under erroneous impression that it could avail exemption. The observations of the Tribunal in this regard are:- 7. As regards the decision of the Apex Court in Dhiren Chemical case, apart from the differentiation between the notification which was under consideration before the Apex Court and the one in the case in hand, it is also sought to be contended that there was no explanation clause, as is found in the present case, available in the notification which was considered by the Apex Court in Dhiren Chemical case. Bearing in mind, this major di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion on the point of rate of duty. In this regard, attention has also been drawn to the decision of the Tribunal in the matter of Morarjee Gokuldas Spg. Wvg. Co. Ltd. vs. CCE, Mumbai reported in 2005(190) ELT 217. 8. In view of above, even though the Hon ble Supreme Court held that the assessee would not get benefit of exemption if duty had not been paid on inputs, the assessee held a bonafide view about interpretation of the notification. Thus, it may not be a case of deliberate evasion of duty. While the Tribunal rightly rejected the claim of the assessee that exemption was applicable, the setting aside of penalty cannot be held to be illegal. Levy of penalty is not automatic merely because an exemption was wrongly availed, even whe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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