By TIOL News Service

MUMBAI, MAY 12, 2015: THE respondents are engaged in the manufacture of excisable goods namely wooden/steel furniture viz. Benches, Stools Chairs etc. but were not paying any Central Excise duty. They also had another unit namely M/s. Educational Equip-Production Centre, North Region, Ahmednagar which was also engaged in similar activities. Respondents are imparting education in state of Maharashtra through various schools and colleges at different places and in their own two workshops they manufacture the said furniture and sell them to their schools and colleges.

A case was made against the respondent for non-payment of CE duty.

A stand was taken that they are not manufacturers; goods are manufactured by the independent contractor. Nonetheless, they paid the duty at the time of investigation itself.

These contentions were rejected by the lower authorities on the ground that the workshop belonged to the respondent; electricity is also being supplied by them and contractors were arranging only for the labour and entire activity was under control and supervision of the respondents. However, the Commissioner(A) set aside the interest imposed under Section 11AB and penalty under Section 11AC of the CEA, 1944.

Not happy with this largesse, the Revenue is in appeal before the CESTAT.

The AR narrated the case and submitted that there was no cause for dropping penalty and interest.

None appeared on behalf of the respondent.

The Bench observed -

"5. We find that there is no dispute about the leviability of the duty. Respondent had already paid duty at the time of investigation itself. Only issue before us is relating to interest under old Section 11AB and penalty under Section11AC. We find that the penalty under Section 11AC is leviable where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reasons of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty. Keeping in view nature of the dispute as contended by the appellant as also his conduct right from the time of investigation and the nature of activities in which they are engaged, we do no find any ingredient as enumerated under Section 11AC is satisfied. In view of the said position we do not find any reason to levy the penalty under Section 11AC. We also find that the in this case demand is for the period 1998 onwards and at the relevant time provision under Section 11AB were similar to that 11AC. Accordingly, in our view for the same reasons, interest is also not chargeable…."

The Revenue Appeal was dismissed.

(See 2015-TIOL-842-CESTAT-MUM)