2007 (5) TMI 115 - AT - Central Excise

Tribunal overturns duty order and penalty for supplying cement, citing credit reversal.

The Tribunal set aside the order confirming duty and penalty for supplying cement without duty payment under a notification to cyclone-affected areas. The ... Demand - Alleged that appellant supplied goods without payment of duty on which they availed credit and accordingly demand were made along with penalty - Held that appellant had made reversal of credit so that demand and penalty not sustainable Issues:1. Demand of duty and penalty for supplying cement without payment of duty under a notification.2. Reversal of credit on lubricant and explosives used in cement production.3. Justification of the demand and penalty imposed.Analysis:The case involved the supply of a significant quantity of cement without payment of duty under a specific notification to cyclone-affected areas. The Adjudicating Commissioner had confirmed a demand of Rs. 4,47,23,114/- and imposed an equal amount of penalty, being 8% of the price of the exempted cement. The Appellants argued that they had reversed the credit on lubricants and explosives, thereby questioning the justification of the demand. The Tribunal noted that the reversal of credits was not disputed. It acknowledged that the exemption availed for supplying cement to the cyclone-affected areas served a public purpose and that it was not feasible for the Appellants to predict the exact quantity cleared under the notification. However, since the Appellants had reversed the credits, the Tribunal held that the demand of Rs. 4,47,23,114/- was not sustainable. Consequently, the imposition of the penalty was deemed unjustified, leading to the setting aside of the impugned order confirming duty and penalty, and allowing the appeal. The Stay Application was also disposed of in favor of the Appellants.