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Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: (i) Whether the supplier of excisable goods cleared to a 100% EOU without payment of duty was liable to pay duty when the re-warehousing certificate was not produced; (ii) Whether penalty was sustainable in the absence of mala fide.
Issue (i): Whether the supplier of excisable goods cleared to a 100% EOU without payment of duty was liable to pay duty when the re-warehousing certificate was not produced.
Analysis: The exemption under Notification No. 1/95-C.E. was available subject to compliance with the prescribed procedure by the supplier as well as the recipient unit. The supplier remained bound to follow Rule 173N read with Rule 156B of the Central Excise Rules, 1944, and to establish fulfilment of the conditions through valid proof of receipt by the consignee. Since the re-warehousing certificate was not produced, the clearance could not be treated as duly proved for the purpose of the exemption.
Conclusion: The duty demand on the supplier was sustainable and was rightly confirmed.
Issue (ii): Whether penalty was sustainable in the absence of mala fide.
Analysis: The record did not establish mala fide on the part of the appellant. In the absence of such finding, the penal consequence was not justified on the facts of the case.
Conclusion: The penalty was not sustainable and was set aside.
Final Conclusion: The duty demand was upheld, but the penalty was deleted, resulting in only partial relief to the appellant.
Ratio Decidendi: Where exemption for duty-free clearance is subject to procedural compliance, the supplier must prove fulfilment of the prescribed conditions by producing the re-warehousing certificate, and in the absence of mala fide, penalty need not follow automatically.
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