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TMI Blog2016 (7) TMI 1071X X X X Extracts X X X X X X X X Extracts X X X X ..... houdhary, Judicial Member And Shri C. J. Mathew, Technical Member For the Appellant : Shri Raghavan Ramabhadran, Advocate For the Respondent : Shri A. Cletus, ADC (AR) ORDER Per P.K. Choudhary The appeal is filed by appellant against OIO No.6/2004 dt. 30.12.2004 passed by Commissioner of Central Excise, Chennai-III. The demand of duty stands appropriated in the order. The issue is relating to penalty of ₹ 5,66,94,739/- imposed under Section 11AC of the Central Excise Act and levy of interest. 2. The Appellant is engaged in the manufacture of parts of car Air-conditioning machine classifiable under Chapter 8415 00. The appellant has been classifying their products as parts after duly filing the declaration as required under the erstwhile Rule 173B of the Central Excise Rules, 1944. The manufactured products are cleared along with the bought out items in a kit packing. The bought out items are sold as such without any value addition. The kit comprising of the manufactured and the bought out items are listed below: a. Evaporator assembly b. Liquid Tube c. Hose discharge d. Condenser e. Compressor f. Receiver drier g. Clutch assembly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S.No. Chapter or heading No. or sub- heading No. Description of goods Rate under the First Schedule Rate under the Second Schedule Condition No. 212A. 84.15 Part of air-conditioning machines -- Nil -- 2.3 Subsequently, the Appellant vide letter dated 1.7.2000 filed another 173B declaration with the Department classifying their product as complete air conditioning machines and informed that they will start paying SED for the clearances henceforth. In that letter, the appellant also informed the Department that they undertake to pay the differential SED for the period from 1.3.2000 to 30.6.2000. On 19.7.2000, the appellant voluntarily calculated and paid the differential duty. 2.4 On 5.12.2002, the department issued a show cause notice proposing to appropriate the duty paid and to impose interest under Section 11AB and equal penalty under Section 11AC. The Original Authority passed the impugned order confirming and appropriating the demand along with interest. The order also imposed equal pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uppression or wilful misstatement can be alleged against them. The Tribunal held that in such a case, no interest or penalty is imposable. Similarly, the appellant also relied on the following cases: (i) Delphi Automotive Systems v. CCE 2004 (163) ELT 47 (Tri. Del.) (ii) CCE v. Delphi Automotive Systems 2013 (183) ELT 239 (SC) 4. Shri A.Cletus, ADC, the learned Authorized Representative appearing for Revenue argued that the appellant has deliberately misstated the product s description after Budget 2000 to avail the benefit of the exemption. He also argued that the appellant s product is not classifiable as parts but as a complete air conditioning assembly itself that that the duty was not paid voluntarily but only after recording an offense case against them on 15.7.2000 and under such circumstances, there was a malafide intention on the part of the appellant to evade payment of duty and therefore, interest and penalty are imposable. 4.1 Ld.A.R submitted that the appellant was required to file the declaration within 30 days but has filed only on 10.7.2000 i.e. after a lapse of 4 months; that the appellant upto the period 1.3.2000 declared the goods as assemblies. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Statement recorded from Shri N. Ramachandran 4. 18.07.2000 Offence case POR No.09/2000 registered. Form AE-2 issued. 5. 19.07.2000 Differential duty of ₹ 5.67 crores paid. 6. 05.12.2002 SCN No.49/2002 dt. 5.12.2002 was issued proposing to demand duty as above and adjust the above demand and also to charge interest and impose penalty. We find that the Learned Commissioner in his order has held as follows (Page 37 of appeal paper book). .... In view of the findings in the pre para, I am inclined to hold that even though they on their own filed a revised declaration giving effect to the declaration with effect from 01.03.2000, the same did not absolve them of their liability of payment of appropriate duty which is a basic requirement under Self Assessment procedure . With the above observation, the Learned Commissioner has imposed an equal amount of penalty u/s. 11AC of the Central Excise Act, 1944 on the ground that payment of taxes were made only after the visit of the authorities on 15/07/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eclaration has been filed on 01.07.2000 with effect from 01.03.2000. c) The case laws relied upon by the Learned Commissioner are not applicable to the facts of the present case as in the said cases it was held that merely because duty was paid before the issuance of SCN, the same would not render the imposition of penalty bad in law. In those cases referred to by the Commissioner, duty was deposited only after the investigation/audit by the Department. However, in the instant case, the Appellant on their own have disclosed the facts to the Department and only after the knowledge of the said fact, the Department had initiated action against the Appellant after which duty was paid which in our view is not applicable to the case in hand as this is a clear case of voluntary disclosure warranting penal proceedings. d) In the case of Subros Ltd. vs. Commissioner of Central Excise, Noida - 2003 (162) ELT 626 (Tri- Del.), it has been held that where change in declaration has been brought to the notice of the Department, then extended period of limitation shall not be invoked. The relevant para of the order is reproduced as under :- 10. We have considered the submissions of bot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... system as defined under Heading 84.15 of the Central Excise Tariff. We also note that the Central Board of Excise Customs, has itself under Circular No. 666/57/2002-CX., dated 25-9-2002, clarified that if an assembly or kit (even in CKD or SKD form) does not have all the above components it will not be considered to have the essential characteristics of an air-conditioning machine and will be classified as parts . The Tribunal, relying upon the said Circular, in the case of Keihin Panalfa Limited v. CCE, Noida - 2003 (151) E.L.T. 367 (T) has held that air-conditioner sub-assembly are eligible for the benefit of exemption under Notification No. 6/2000-CE. We also note that the Appellants, in their letter dated 4-8-2000 has again referred to their earlier declarations in which the benefit of exemption of SED on parts and accessories was claimed by them. They had also mentioned in the said letter that they had been given to understand by the Department to debit the Special Excise Duty. Then they had chosen to pay SED with effect from 4-8-2000 under protest and filed a revised declaration under protest. No mileage from the said declaration can be derived by the Revenue in support of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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