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of <h1>Tribunal overturns penalty and confiscation orders for alleged misuse of exemption benefits.</h1> The Tribunal overturned the penalty and confiscation orders imposed on the appellants for allegedly bifurcating a manufacturing unit to avail exemption ... Confiscation and penalty Issues:Imposition of penalty and confiscation of goods due to alleged bifurcation of manufacturing unit to avail exemption benefits under specific notifications.Analysis:The appeal challenged the penalty and confiscation of goods imposed on the appellants for allegedly bifurcating a manufacturing unit to benefit from exemption notifications. The Central Excise officers discovered that the factory was bifurcated to limit clearances within the exemption threshold. The show cause notice accused the appellants of evading duty by clubbing clearances from both units. The Ld. Advocate argued that after detailed examination, it was found that the clearances fell within the exemption limit, absolving the appellants of duty payment responsibility. He referenced a judgment stating that exempted goods are not excisable, thus no penalty should apply. Another case was cited where penalty was not justified due to a genuine belief of no duty liability. The Ld. Counsel contended that as the goods were not excisable, penalty provisions did not apply, urging for the penalty and confiscation orders to be set aside.The Respondent, however, argued that the appellants failed to file a declaration for duty exemption under the relevant notifications despite exceeding the exemption limit. It was asserted that since the goods were excisable and removed without duty payment or license, confiscation and penalty were rightfully imposed. The Respondent supported the adjudicating authority's findings.Upon review, the Tribunal noted that penalties under Rule 173Q apply only to excisable goods. Citing a judgment, it was established that fully exempt goods are not excisable. Consequently, confiscation and penalty on non-excisable goods were deemed illegal. The Tribunal set aside the orders of confiscation and penalty, ruling in favor of the appellants.In conclusion, the impugned order was overturned, with any consequential relief to be granted as per the law.
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