2012 (12) TMI 933 - AT - Central Excise

Tribunal overturns penalty for duty-free scrap clearance, believing appellant's plausible duty-free claim.

The tribunal set aside the penalty imposed on the appellant for clearing scrap without duty payment, as it found the appellant's belief that the scrap did ... Penalty - Clearance of scrap - Held that:- Clearance of scrap was on proper documents. There was no other charge on the part of the appellant to suppress the clearance of such scrap. As such, it could be a bonafide belief on their part that such scrap did not attract any duty. In these circumstances, by extending the benefit of doubt to them, I set aside the penalty imposed - Decided in favour of assessee. Issues:Challenge to penalty imposed on appellant for clearance of scrap without duty payment.Analysis:The appellant, engaged in manufacturing man-made yarn, cleared scrap without paying duty from April 2006 to June 2007. The Revenue issued a show cause notice proposing a duty demand of Rs.1,86,206 on the grounds that the scrap arose from cenvatable capital goods. The adjudicating authority confirmed a demand of Rs.66,344, already deposited by the appellant, and dropped the remaining demand. A penalty of Rs.66,344 was imposed under section 11AC of the Central Excise Act, which was upheld by the Commissioner (Appeals), leading to the present appeal.The appellant argued that the clearance without duty payment was a mistake promptly rectified upon notification. The appellant claimed there was no intention to evade duty, and the penalty was unjustified. The tribunal noted that the scrap clearance was supported by proper documentation, and there was no evidence of intent to conceal or suppress the activity. Given the circumstances, the tribunal found it plausible that the appellant genuinely believed the scrap did not attract duty. Consequently, the penalty was set aside, and the appeal was allowed on 18.12.2012.