1996 (10) TMI 307 - AT - Central Excise

Tribunal overturns penalty for duty payment mistake, citing clarificatory notification.

The Tribunal set aside the confiscation and penalty imposed on the appellants for removing processed goods without duty payment, ruling in favor of the ... Confiscation and penalty Issues:1. Eligibility for exemption under Notification No. 253/82.2. Interpretation of Notification No. 213/88 regarding calendering and zero zero finishing machine.3. Confiscation of goods and imposition of penalty.4. Payment of duty under protest and eligibility for refund.Eligibility for Exemption under Notification No. 253/82:The appeal was against an order confirming the imposition of a penalty and confiscation of goods due to the removal of processed goods without payment of duty. The appellants claimed exemption under Notification No. 253/82, dated 8-11-1982, based on the description in the gate pass indicating only calendering had been done. However, officers found a zero zero finishing machine installed, leading to doubts about eligibility. The appellants admitted the mistake before a show cause notice was issued and made a deposit. The clarification under Notification No. 213/88, dated 16-8-1988, was cited by the ld. Advocate to argue that calendering included processing with a zero zero machine without stenter attachment. The Tribunal's decision in Omkar Textile Mills Pvt. Ltd. v. CCE was referenced to support the clarificatory nature of Notification 213/88, potentially relating back to the original Notification 253/82.Interpretation of Notification No. 213/88 regarding Calendering and Zero Zero Finishing Machine:The ld. JDR contended that even if Notification 213/88 was clarificatory, the exemption applied to fabrics processed with a zero zero machine without stenter attachment. Lack of evidence regarding the absence of stenter attachment at the time of the panchnama was highlighted. The JDR argued that the clarification was not available at the time of goods removal, and without proof of the machine lacking stenter attachment, the benefit could not be extended. The JDR also emphasized the admission of mistake by the appellants and the voluntary payment of duty, suggesting liability for removal of goods without payment.Confiscation of Goods and Imposition of Penalty:The order of confiscation and penalty imposition were based on the allegation of goods removal without duty payment, despite ineligibility for the Notification 253/82 exemption. The Tribunal considered the subsequent clarification under Notification 213/88 and the appellants' actions in good faith. Ultimately, the Tribunal set aside the confiscation and penalty, allowing the appeal based on the potential benefit of the clarification in relation to the confiscation and penalty.Payment of Duty under Protest and Eligibility for Refund:The appellants paid the duty amount voluntarily before the show cause notice, without indicating it was under protest. The Tribunal noted that without a protest, even if eligible for the Notification 253/82 benefit as clarified by Notification 213/88, refund claims might not be valid. The question of whether the order of confiscation and penalty should be upheld was addressed in light of the subsequent clarification and the appellants' voluntary payment, leading to the decision to set aside the confiscation and penalty.