2008 (1) TMI 145 - AT - Central Excise

Tribunal dismisses Revenue's appeal, upholds duty exemption for reprocessed plastic materials

The appeal by the Revenue was dismissed by the Appellate Tribunal CESTAT, Chennai, as it upheld the Commissioner's decision to drop a duty demand of ... Plastic materials reprocessed out of scrap & waste was exempt u/not. 15/94 - period of dispute is 7.7.94 to 5.9.95 – impugned product was exempted by not. 15/94 only w.e.f. 6.9.95 vide not. 111/95 – held that this amendment should be treated as clarificatory & can be given retrospective effect – - benefit of this entry would be available to assessee for above period so demand was rightly dropped - assessee was under bona fide belief so penalty & interest not imposable by invoking larger period Issues:- Dropping of duty demand- Proposal to impose penalty under Section 11AC of the Central Excise Act- Non-levying of interest under Section 11AB of the Act on dutyDropping of Duty Demand:The appeal by the Revenue was against the Commissioner's order dropping a duty demand of Rs.1,31,745, not imposing penalty under Section 11AC, and not levying interest under Section 11AB of the Central Excise Act. The plastic materials reprocessed by the assessee were held exempt from duty under various notifications. The Revenue argued that the relevant notification providing for nil rate of duty was inserted after the disputed period, making it inapplicable. The assessee contended that the provision should have retrospective effect, citing legislative intent and past precedents. The Tribunal found that the introduction of the provision was clarificatory and retrospective, thus dropping the duty demand.Proposal to Impose Penalty under Section 11AC:The Revenue sought to impose a penalty under Section 11AC for a period after 28.9.1996. However, the Tribunal had previously ruled in Final Order No. 909/2006 that the assessee had a bona fide belief in not being liable to pay duty, negating the extended period of limitation for recovery. As duty liability was negated, the Tribunal held that no penalty could be imposed. Additionally, a penalty under Rule 173Q was also vacated in the final order. Therefore, the Tribunal dismissed the Revenue's claim for imposing a penalty under Section 11AC.Non-Levying of Interest under Section 11AB:The Tribunal also addressed the issue of non-levying interest under Section 11AB. Given the absence of duty liability and the previous rulings on penalty imposition, the Tribunal concluded that the Revenue's grievance regarding Section 11AB could not be entertained. Consequently, the appeal by the Revenue was dismissed in its entirety.This detailed analysis of the judgment from the Appellate Tribunal CESTAT, Chennai highlights the key issues involved, the arguments presented by both parties, and the Tribunal's reasoning and decision on each issue, maintaining the legal terminology and significant phrases from the original text.