2007 (10) TMI 106 - AT - Central Excise

Tribunal Upholds Decision on Duty Penalty Dispute, Emphasizes Need for Clear Grounds

The Tribunal upheld the Commissioner (Appeals)'s decision in a dispute over penalty under Section 11AC for non-payment of duty on scrap generated at a job ... Duty demanded on the ground that respondent had not discharged the duty liability on scrap generated at the job worker’s end and not returned to them – Duty has been paid but penalty is not imposable because there is no intention of evasion of duty. Issues:Dispute over penalty imposed under Section 11AC for non-payment of duty on scrap generated at job worker's end.Analysis:The appeal before the Appellate Tribunal CESTAT, Mumbai was against the Order-in-Appeal passed by the Commissioner of Central Excise (Appeals), Pune-I. The main issue revolved around the penalty imposed on the respondent under Section 11AC for not discharging duty liability on scrap generated at the job worker's end. The Revenue contended that the penalty was justified as the duty was paid only after being pointed out, while the respondent argued they were not liable to pay duty on such scrap based on Tribunal decisions.Upon considering submissions and records, it was noted that the respondent did not dispute the duty paid but challenged the penalty. The demand for duty arose from non-discharge of duty liability on the scrap not returned from the job worker's end. The Tribunal found this to be a disputed issue requiring resolution by a Larger Bench. It was observed that the ingredients for invoking penalty under Section 11AC were not present in this case, indicating no intention to evade duty payment by the respondent.Consequently, the Tribunal upheld the Commissioner (Appeals)'s order, deeming it correct and reasoned. The appeal by the Revenue was rejected, affirming that the penalty under Section 11AC was not applicable in the absence of necessary elements. The judgment highlighted the importance of resolving disputed issues properly and the need for clear grounds for imposing penalties under relevant sections.This detailed analysis of the judgment showcases the careful consideration of arguments, legal precedents, and factual circumstances by the Tribunal in reaching a decision on the penalty dispute related to duty payment on scrap generated at the job worker's end.