2007 (3) TMI 579 - AT - Central Excise

Tribunal upholds annulment of penalty under Central Excise Act, citing bona fide belief

COMMISSIONER OF C. EX., DELHI-III, GURGAON Versus NAVSHIKA POLYPACK INDUSTRIES (P) LTD.

The Appellate Tribunal CESTAT, New Delhi dismissed the appeal by the Revenue against the decision to annul a penalty imposed on the respondent under the ... Penalty Issues:1. Appeal against setting aside penalty imposed by adjudicating authority.2. Dispute over duty payment under Section 4A of the Central Excise Act, 1944.3. Validity of penalty set-aside by the appellate Commissioner.4. Interpretation of bulk removals under Section 4A for valuation purposes.5. Bona fide belief of respondent regarding applicable section for goods clearance.Analysis:The appeal before the Appellate Tribunal CESTAT, New Delhi was lodged by the Revenue challenging the decision of the Commissioner (Appeals) to annul a penalty of Rs. 23,740 imposed on the respondent due to a duty demand of the same amount confirmed under Section 11A(1) of the Central Excise Act, 1944. The respondent accepted the duty liability and paid it along with the interest before the show cause notice was issued. However, the adjudicating authority alleged that the respondent had concealed facts and cleared goods under the wrong section of the Act.The department's representative argued that the penalty should not have been set aside as the duty was payable under Section 4A for specific products covered by a notification. Conversely, the respondent's counsel contended that all details were known to the department, and the respondent believed bulk removals were not subject to Section 4A. The Tribunal found that the respondent's belief was valid as per a Board circular exempting bulk supplies from Section 4A for valuation purposes. Additionally, since the duty discrepancy was over fifteen months and only amounted to Rs. 23,740, the Tribunal agreed with the Commissioner that there was no intent to evade duty. Consequently, the appeal was dismissed, affirming the Commissioner's decision to set aside the penalty.In conclusion, the Tribunal's analysis revolved around the respondent's bona fide belief regarding the applicable section for goods clearance, the interpretation of bulk removals under Section 4A, and the absence of intent to evade duty due to the minimal discrepancy over a significant period. The judgment underscores the importance of considering all relevant factors in determining duty liability and penalty imposition under the Central Excise Act, 1944.