Tribunal upholds decision setting aside penalty, citing lack of evidence. Revenue appeal rejected.

The Tribunal upheld the decision to set aside the penalty imposed on the respondent, emphasizing the lack of evidence proving their involvement in the willful suppression of value. The Revenue's appeal was rejected as they failed to prove suppression on the respondent's part, with the Tribunal noting the absence of evidence against the respondent and the principal manufacturer's non-involvement in the proceedings.

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Issues:
1. Duty payment on packing and forwarding charges.
2. Imposition of penalty under section 11AC of the Central Excise Act.

Analysis:

Issue 1: Duty payment on packing and forwarding charges
The case involved the manufacturing activity on a job-work basis by the respondent for a company, where goods were dispatched to customers after payment of excise duty based on the value declared by the company. However, investigations revealed that the company was collecting additional charges for packing and forwarding, on which no excise duty was paid. The respondent, upon being informed, paid the duty on these charges along with interest. The Revenue issued a show cause notice for demanding the duty short paid, appropriating the amounts paid, and imposing a penalty under section 11AC. The adjudicating authority confirmed the demand, interest, and imposed a penalty equal to the duty involved.

Issue 2: Imposition of penalty under section 11AC
The appeal was filed by the Revenue challenging the setting aside of the penalty by the Commissioner (Appeal). The Revenue argued that duty should be paid on the value inclusive of packing and forwarding charges, and the principal manufacturer had willfully suppressed the collection of these charges. They contended that the respondent colluded with the principal manufacturer for suppressing the assessable value, making them liable for penalty under section 11AC. The respondent, on the other hand, argued that they were not aware of the additional charges collected by the principal manufacturer and promptly paid the duty upon notification. They emphasized that there was no evidence of their knowledge or willful suppression. The Tribunal observed that the Revenue failed to prove suppression on the part of the respondent, and the allegation was based on presumption. As no evidence was presented against the respondent, and the main manufacturer was not part of the proceedings, the Tribunal accepted the respondent's contention that no suppression occurred on their part, leading to the rejection of the Revenue's appeal and disposal of the cross-objection filed by the respondent.

In conclusion, the Tribunal upheld the decision of the Commissioner (Appeal) to set aside the penalty imposed on the respondent, emphasizing the lack of evidence proving the respondent's involvement in the willful suppression of value.

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