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of <h1>Tribunal Upholds Revenue's Classification Decision and Rejects Interest/Penalty Claim</h1> <h3>COMMISSIONER OF C. EX. & CUS., DAMAN Versus NIRMALA DYECHEM</h3> COMMISSIONER OF C. EX. & CUS., DAMAN Versus NIRMALA DYECHEM - 2012 (281) E.L.T. 677 (Guj.) , 2012 (28) S.T.R. 666 (Guj.) Issues:Classification of product under Central Excise Act, 1944; Liability of interest and penalty under Section 11AB of the Act.Classification Issue:The appeal arose from a dispute regarding the classification of the respondent's product, 'Ala Fabric Bleach,' under Heading 2828.90 (as claimed by the assessee) or Heading 3402.90 (as claimed by the Revenue). The Commissioner [Appeals] accepted the assessee's claim, but the Revenue appealed to the Tribunal. During the Tribunal hearing, the assessee conceded to the Revenue's claim, leading to the Tribunal setting aside the appeal. However, the question remained whether the assessee should be liable for interest and penalty under Section 11AB of the Act and Rule 173Q[1] of the Central Excise Rules, 1944.Interest and Penalty Issue:The Tribunal concluded that there was no mala fide intention on the part of the assessee to evade duty, thus rejecting the Revenue's claim for interest and penalty. The Revenue contended that deliberate misstatement by the assessee warranted the imposition of interest and penalty, citing a Bombay High Court decision. Section 11AB of the Act allows for interest in cases of short-payment due to fraud, misstatement, or contravention with intent to evade duty. However, the show-cause notice in this case did not allege fraud or wilful misstatement. Therefore, the Tribunal rightly held that interest could not be imposed. Similarly, penalty under Section 11AC requires collusion or intent to evade duty, which was not alleged in the show-cause notice. The judges disagreed with the Bombay High Court's interpretation and noted that subsequent amendments did not apply retroactively. Ultimately, the appeal was dismissed as no substantial question of law was found.This detailed analysis covers the classification issue and the liability of interest and penalty under Section 11AB of the Central Excise Act, 1944, as addressed in the Gujarat High Court judgment.
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