2012 (8) TMI 820 - AT - Central Excise

Tribunal grants waiver for duty, interest, penalty under Notification 44/2001, emphasizes clear reasoning in duty demands

KALPENA INDUSTRIES LTD. Versus COMMISSIONER OF CENTRAL EXCISE, VAPI

The Tribunal allowed the waiver of pre-deposit of duty amount, interest, and penalty for clearances made to an advance authorization order holder under ... Waiver of pre deposit - Benefit of exemption of Notification No. 44/2001 - Held that:- appellant herein is eligible to avail benefit of exemption of Notification No. 44/2001 for the clearances made to advance authorisation order holder. In this case, the appellant has discharged the duty liability on the goods - there is no logic in the show cause notice as to the demand of the differential duty from the appellant as said show cause notice invokes the extended period time limitation only on the ground that appellant have availed of benefit of notification but has also paid the duty. It is also not very clear how the value of goods that has been imported by the advance licence holder can be considered for the value of the goods cleared from the appellant’s premises under the Central Excise Act and more specifically Section 4. In our considered view, as the goods are cleared by the appellant from his factory, the issue comes under Section 4 of the Central Excise Act, wherein the appellant is required to discharge duty on transaction value. There is no evidence to indicate that the said value is incorrect or there is any flow back. We find that appellants have made out a prima facie case for the waiver of pre-deposit of the amounts involved. - Stay granted. Issues:Waiver of pre-deposit of duty amount, interest, and penalty under Notification No. 44/2001 for clearances made to advance authorization order holder.Analysis:The appellant filed a stay petition seeking the waiver of pre-deposit of duty amount, interest, and penalty. The Tribunal heard both sides and examined the records. It was noted that the appellant was facing a demand for differential duty due to alleged undervaluation of goods cleared to an advance authorization order holder. However, the appellant was eligible for exemption under Notification No. 44/2001 for such clearances. The appellant had already discharged the duty liability on the goods. The Revenue authorities were demanding duty based on the value of goods imported by the advance license holder, which was unclear and lacked logic. The show cause notice invoked an extended time limitation solely based on the appellant availing the notification's benefit and paying the duty. The Tribunal found that the issue fell under Section 4 of the Central Excise Act, where duty is required to be discharged on transaction value. There was no evidence to suggest incorrect valuation or any flow back. The Tribunal concluded that the appellant had established a prima facie case for the waiver of pre-deposit of the amounts involved. Consequently, the application for waiver was allowed, and recovery was stayed pending the appeal's disposal.This judgment highlights the importance of correctly interpreting statutory provisions and notifications to determine the duty liability. It underscores the necessity for Revenue authorities to provide logical and clear reasoning in show cause notices for duty demands. The Tribunal's analysis focused on the applicability of Section 4 of the Central Excise Act in determining duty liability on transaction value. The decision to grant the waiver of pre-deposit was based on the appellant's fulfillment of the conditions for exemption under Notification No. 44/2001 and the absence of evidence supporting the Revenue authorities' demand for differential duty. The Tribunal's ruling serves as a reminder of the need for proper justification and evidence in duty-related disputes to ensure fair and just outcomes for the parties involved.