2014 (10) TMI 276 - AT - Central Excise

Tribunal confirms duty demand, overturns penalty under Rule 25, citing conflicting interpretations.

GURUKRIPA RESINS PVT LTD. Versus COMMISSIONER OF CENTRAL EXCISE, NAGPUR

The Tribunal partly allowed the appeal, confirming the duty demand but setting aside the penalty imposed under Rule 25 of the Central Excise Rules, 2002. ... Whether use of power in handling raw materials would disentitle them of the duty exemption given to non-power operated units vide Notification No. 28/96-CE dated 11/09/1996. - Held that:- Appellant is liable to discharge the duty demand confirmed along with interest thereon and we hold accordingly. As regards the penalty of ₹ 10,63,645/-, at the material time, there was an order in favour of the appellant by this Tribunal and therefore the appellant could not have been alleged to have indulged in suppression of facts. Therefore, imposition of penalty is not warranted. Since the issue relates to interpretation of law in respect of an exemption notification, we set aside the penalty imposed on the appellant. Following decision of assessee's own previous case [2011 (7) TMI 26 - SUPREME COURT OF INDIA] - Decided partly in favour of assessee. Issues:1. Appeal against duty demand and penalty under Rule 25 of the Central Excise Rules, 2002.2. Interpretation of duty exemption for non-power operated units under Notification No. 28/96-CE.3. Contesting penalty imposition based on conflicting decisions.Analysis:1. The appeal was filed against Order-in-Appeal confirming a duty demand of &8377; 12,03,345/- and a penalty of &8377; 10,63,645/- under Rule 25 of the Central Excise Rules, 2002. The appellant contested the penalty imposition while accepting the duty demand based on the issue of duty exemption for non-power operated units.2. The main issue revolved around whether the use of power in handling raw materials would disentitle the appellant of the duty exemption provided to non-power operated units under Notification No. 28/96-CE. The appellant acknowledged a previous decision by the Hon'ble Apex Court against them on this issue. However, the appellant contested the penalty imposition citing a previous Tribunal decision in their favor, arguing against the penalty on the grounds of a favorable interpretation of the exemption notification.3. The Tribunal, after considering the arguments from both sides, waived the pre-deposit requirement and proceeded to consider the appeal. The Tribunal held that the appellant was liable to discharge the duty demand along with interest based on the Supreme Court's decision in the appellant's own case. However, regarding the penalty of &8377; 10,63,645/-, the Tribunal noted that there was a previous Tribunal order in favor of the appellant, indicating no suppression of facts. Therefore, the Tribunal set aside the penalty imposed on the appellant, emphasizing the issue's interpretation of law related to an exemption notification.4. Ultimately, the Tribunal partly allowed the appeal and disposed of the stay petition, emphasizing the specific legal interpretations and conflicting decisions that influenced the judgment.