2015 (4) TMI 619 - AT - Central Excise

Confirmation of Duty on Zinc Dross & Ash, Penalty Set Aside

The court confirmed the duty on zinc dross and ash for a specific period, as the goods were deemed marketable post-amendment to the Central Excise Act. ... Dutiability of zinc dross and ash - manufacture and marketability post-amendment to section 2(d) of the Central Excise Act and its legal effect - penalty for suppression where clearances were reflected in returns and revenue had knowledge - pre-deposit requirement for penaltyDutiability of zinc dross and ash - manufacture and marketability post-amendment to section 2(d) of the Central Excise Act and its legal effect - Confirmation of duty and interest in respect of zinc dross and ash for the period 1.7.2010 and 31.12.10 - HELD THAT: - The Tribunal recorded that, following the amendment to section 2(d) of the Central Excise Act, the goods in question became marketable and were to be regarded as having been manufactured by the appellant. The appellant did not contest this legal conclusion before the Tribunal and did not challenge the confirmation of the demand; accordingly the duty and interest were confirmed. [Paras 2, 3]Duty and interest confirmed in respect of zinc dross and ash for the stated period.Penalty for suppression where clearances were reflected in returns and revenue had knowledge - pre-deposit requirement for penalty - Whether penalty should be imposed where clearances of zinc dross and ash were reflected in returns and the revenue had knowledge - HELD THAT: - The appellant submitted that all clearances were disclosed in returns and there was no suppression; the Revenue did not resist on the merits. The Tribunal applied the ratio of KEC International Ltd. that, where clearances were effected with the knowledge of the Revenue, penalty could be set aside. Consequently, the Tribunal dispensed with the pre-deposit condition for penalty (in view of deposit of duty and interest) and, applying that precedent, set aside the penalty while confirming duty and interest. [Paras 3, 5]Penalty set aside; pre-deposit condition in respect of penalty dispensed with as duty and interest were deposited.Final Conclusion: The appeal is disposed of by confirming the duty and interest in respect of zinc dross and ash for the period 1.7.2010 and 31.12.10, while setting aside the penalty on the ground that the clearances were reflected in returns and were with the knowledge of the Revenue; the pre-deposit condition for penalty was dispensed with as the duty and interest were deposited. Issues:Confirmation of duty on zinc dross and ash, imposition of penalty for non-suppression of clearances in returns.Confirmation of Duty on Zinc Dross and Ash:The judgment confirms the duty against the appellant concerning zinc dross and ash for the period from 1.7.2010 to 31.12.2010. The lower authorities determined that post-amendment to the Central Excise Act, the goods were marketable, leading to the conclusion that the appellant manufactured them. The legal issue of marketability was not disputed by the appellant, and the demand with interest was not challenged. Therefore, the duty was upheld based on the above analysis.Imposition of Penalty for Non-Suppression of Clearances in Returns:The appellant contended that since they had disclosed all clearances of zinc dross and ash in their filed returns, there was no suppression on their part warranting the imposition of a penalty. The learned advocate did not challenge the duty confirmation but argued against the penalty imposition. The Departmental Representative left the decision to the Bench. Referring to a precedent involving KEC International Ltd., where the duty was upheld but the penalty was set aside due to clearances being made with the knowledge of the Revenue, the Tribunal followed a similar approach. Consequently, the penalty was set aside while confirming the duty and interest, aligning with the principle established in the cited case.In conclusion, the judgment dispensed with the pre-deposit of penalty as the duty was already deposited by the appellant. The duty on zinc dross and ash was confirmed based on marketability post-amendment to the Central Excise Act. While the appellant did not dispute the duty, they argued against the penalty imposition, citing no suppression due to disclosure in returns. Following a precedent, the Tribunal set aside the penalty, maintaining the duty and interest. The stay petition and appeal were disposed of accordingly.