Appeal partially allowed, penalty reduced to 25% with conditions. Tribunal upholds valuation, addresses penalty for facts suppression.

The appeal was partly allowed, reducing the penalty to 25% subject to specified conditions. The Tribunal upheld the valuation as per the department's proposal and addressed the penalty under Section 11AC for suppression of facts regarding goods clearance to a related person. The judgment emphasized the necessity of offering the option of reduced penalty in accordance with Supreme Court judgments and circulars.

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Issues involved:
Valuation of goods manufactured by 100% EOU and cleared to DTA - Applicability of Customs Act or Central Excise Act for valuation - Penalty under Section 11AC for suppression of facts.

Valuation Issue Analysis:
The appellant adopted valuation as per the Central Excise Act. The issue of interpretation of valuation under the Customs Act or Central Excise Act was raised. The Tribunal had previously passed an order in the appellant's own case regarding this issue. The appellant sought waiver of penalty under Section 11AC. Various judgments were cited to support the argument, including Varendra Eng. Enterpreneurs Vs CCE 2017 (357) ELT 618 and Bhushan Steel Ltd. vs CCE 2015 (329) ELT 424.

Penalty under Section 11AC Issue Analysis:
The Revenue contended that there was suppression of facts as the appellants did not declare that the goods were supplied to a related person. The penalty under Section 11AC was imposed accordingly. The Tribunal found that the demand was raised invoking the extended period, and the penalty was maintainable due to the suppression of facts. Reference was made to the Hon'ble Supreme Court judgment in UOI vs Dharamendra Textile Processors 2008 (231) ELT 3 (S.C.). However, it was noted that the adjudicating authority did not offer the option of reduced penalty of 25% as required by Supreme Court judgments and CBEC Circular No. 208/07/2008-Cx-6 dated 22.05.2008. Following the Supreme Court's ratio, the penalty was reduced to 25% on the condition that the duty confirmed, interest, and 25% penalty were paid within one month from the date of the order.

In conclusion, the appeal was partly allowed, reducing the penalty to 25% subject to the specified conditions. The Tribunal upheld the valuation as per the department's proposal and addressed the issue of penalty under Section 11AC based on the suppression of facts regarding the clearance of goods to a related person. The judgment highlighted the importance of offering the option of reduced penalty as per Supreme Court judgments and circulars.

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