2013 (10) TMI 49 - HC - Central Excise

CESTAT decision upheld as appellant acted in good faith; not penalized for reliance on corporation's misinformation.

The court upheld the decision of CESTAT to delete the duty and penalty beyond the normal timeframe, as the appellant acted in good faith based on ... Deletion of Duty and Penalty u/s 11AC - Whether the CESTAT was justified in deleting the duty confirmed and penalty levied under Section 11AC for the period beyond one year from the date of issuance of the show-cause notice – Held that:- If supplies were made by the assessee during the period on the basis of the representations made by Transmission Corporation of Andhra Pradesh and subsequently it was found that the representation made by the Transmission Corporation was erroneous, the assessee could not be penalized - no fault can be found with the decision of the CESTAT in deleting the demand of duty and penalty for the period beyond the normal period. - Decided against the revenue. Issues:Whether the CESTAT was justified in deleting the duty confirmed and penalty levied under Section 11AC for the period beyond one year from the date of issuance of the show-cause notice.Analysis:The case involved a dispute regarding the duty confirmed and penalty levied under Section 11AC by CESTAT for a specific period. The appellant had supplied goods to the Transmission Corporation of Andhra Pradesh under an exemption notification. It was believed that the Japan Bank of International Corporation (JPIC) financed the project, making the appellant eligible for the exemption. However, a subsequent communication revealed that JPIC was not a notified international organization, rendering the benefit of the notification unavailable to the appellant.The key question was whether the appellant could be penalized for making supplies based on erroneous representations by the Transmission Corporation of Andhra Pradesh. The court held that if the appellant acted in good faith based on the information provided by the corporation, they should not be penalized for any subsequent errors in the representation.The court found no fault with the decision of the CESTAT in deleting the demand of duty and penalty for the period beyond the normal timeframe. It was concluded that the appellant had acted in good faith, relying on the representations made by the corporation. Therefore, the appeal was dismissed, and no costs were awarded in the matter.