By TIOL News Service

MUMBAI, APRIL 19 2017: DURING the period 01/04/2003 to 31/05/2006, appellant availed benefit of SSI exemption Notification No. 8/2003-CE on the pastries, cookies, chocolates and cakes manufactured.

On being informed that they are not entitled to the exemption, the appellant discharged the CE duty with interest on 12.06.2006 and informed the department.

On receipt of this letter and payment particulars, Revenue issued SCN dated 08/03/2007 proposing appropriation of amounts paid and imposition of penalty/interest.

The appellant contested only the penalty.

The original authority recorded a finding that provisions of Section 11AC are invokable as appellant being in the organized sector should have known the law and should not have availed benefit of SSI exemption; thereby they have suppressed the facts with intent to evade duty.

This order was upheld by the Commissioner(A).

Before the CESTAT, the appellant submitted that the entire amount of duty and interest was paid by them on realizing that there is a mistake in interpretation of the notification and, therefore, penalty should be set aside. Reliance is placed on 2007-TIOL-158-SC-CX ; 2005-TIOL-123-SC-CX-LB and 2004-TIOL-45-SC-CX.

The AR informed the Bench that the appellant had not filed the declaration from 2001-02 till the date the show cause notice and which itself shows that there was intention of suppressing the value of goods for availing the benefit of notification.

The Bench observed –

+ It is on record that the show cause notice was issued after the duty liability and interest thereon was paid by the appellant on his own.

+ On reading of the show cause notice, it is noted that charge to evade Central Excise duty, was based only on an allegation that appellant being in the organized sector should have known the law and should have read the notification correctly before availing the benefit and it cannot be said that they were unaware of the law. I do not find any merits in the arguments raised … and as recorded by both the lower authorities.

+ Provisions of Section 11A(2B), as it stood during the relevant period, specifically states for non-issuance of show cause notice on discharging duty liability and the interest thereof, on ascertainment of duty liability by an assessee on their own or on being pointed out by the Central Excise officer.

+ If this be so it cannot be said that the appellant had intention to evade payment of Central Excise duty on the branded goods manufactured and cleared by them.

Noting that the case laws cited by the appellant aptly cover the case of the assessee, the Bench set aside the penalty while upholding the duty liability with interest.

The appeal was disposed of.

(See 2017-TIOL-1302-CESTAT-MUM)