2012 (7) TMI 844 - AT - Central Excise

Penalty under Central Excise Rules not justified. Duty paid without protest before notice. Penalty set aside.

KRISHNA ELECTRICAL INDUSTRIES LTD. Versus COMMISSIONER OF C. EX., INDORE

The Tribunal held that the penalty imposed on the appellant under Rule 25 of the Central Excise Rules, 1944, was not justified as the duty was paid ... Exemption under Notification No. 6/2006-C.E., dated 1-3-2006 - Revenue contends that appellant are not eligible for duty exemption under this notification, as the thermal power plant to which the supplies were made, cannot be called a power plant of capacity of 1000 MW or more, as it comprises of three turbines of 660 MW each, while exemption is available to a plant which generates 1000 MW or more from a single unit - Held that:- There is no dispute about the fact that the entire duty demand along with interest was paid by the appellant when the department pointed out to them that they are not eligible for exemption and this was done prior to issue of show cause notice and this fact had been intimated to the department. In view of this, in terms of the provisions of Section 11A(2B), no show cause notice is required to be issued and hence there was no question of imposing penalty on the appellant - Decided in favour of assessee. Issues:Interpretation of duty exemption under Notification No. 6/2006-C.E.Imposition of penalty under Rule 25 of Central Excise Rules, 1944.Interpretation of duty exemption under Notification No. 6/2006-C.E.:The case involved the appellant, a cable manufacturer, supplying cables to a Mega Power Project for a thermal power plant installation. The appellant availed full duty exemption under Notification No. 6/2006-C.E., dated 1-3-2006, for clearances made between May 2006 to February 2007. The department contended that the appellant was not eligible for duty exemption as the power plant did not meet the requirement of generating 1000 MW or more from a single unit. The appellant paid the disputed duty and interest but was issued a show cause notice for duty demand confirmation and penalty imposition. The Commissioner confirmed the duty demand and imposed a penalty. The appellant challenged the penalty imposition, arguing that they had paid the duty without protest and had informed the department, thus no penalty should be imposed. The Tribunal held that as per Section 11A(2B), no show cause notice was required to be issued since the duty was paid before the notice, and therefore, the penalty was not justified. Consequently, the penalty was set aside, and the appeal was allowed.Imposition of penalty under Rule 25 of Central Excise Rules, 1944:The appellant contended that the penalty imposed under Rule 25 of the Central Excise Rules, 1944, was unwarranted as they had paid the disputed duty amount without protest upon the department's request. The appellant had applied for a refund under the deemed export scheme after paying the duty and interest, which was granted. The appellant argued that since they had complied with the department's requirements promptly, no penalty should be levied. The Tribunal agreed with the appellant's argument, stating that as per Section 11A(2B), since the duty was paid before the issuance of the show cause notice and the department was duly informed, the penalty was not justified. Therefore, the Tribunal set aside the penalty imposed under Rule 25 of the Central Excise Rules, 1944, and allowed the appeal filed by the appellant.