CX -No interest imposition was proposed in SCN and it was also not demanded in adjudication order, therefore, Tribunal could not have held appellant liable to pay interest : CESTAT
By TIOL News Service
MUMBAI, JUNE 18, 2018: THE CESTAT while dismissing the appeal filed, by its order dated 29.12.2017 - 2018-TIOL-288-CESTAT-MUM, held thus -
CX - Whether the goods manufactured and cleared by the appellant is machinery falling under chapter heading 841900 or parts thereof and consequently whether the same is eligible for exemption notification no. 56/95-C.E - Also whether non-mention of sub-clause of rule 173Q of CER, 1944 while imposing penalty is justified.
Held: As regards the merit of the case whether the appellant is liable to pay duty @ 10% or 15% under the notification no. 56/95-CE, the Tribunal in the appellants own case has decided the matter against the appellantin the order dated 28.02.2006, therefore, demand of duty and interest is sustainable - Merely by not mentioning the sub-clause the penalty cannot be avoided - appellant was very much aware about legality of the issue and, therefore, they have represented to the government via CII to make uniform rate of machine and parts i.e. 10%, therefore, appellant knowingly claimed the wrong exemption - as against the duty demand of Rs.96,40,472/-, penalty of Rs.25 lakhs was imposed u/r 173Q and which is found to be reasonable -impugned order upheld and appeal dismissed: CESTAT [para 5, 6]
The appellant has filed a ROM application and seeks rectification of the following ‘apparent' mistakes in this order -
It is mentioned that the order (in paragraph 5) holds the “demand of duty and interest thereon as sustainable”, however, since there is no proposal of interest either in the show-cause notice or in the order, no such order could have been passed by the Tribunal. Furthermore, during the relevant time, interest was payable only u/s 11AA of the CEA, 1944 but since the the duty determined was admittedly paid within the stipulated time period within three months of the determination of duty, liability of interest even according to this section does not arise.
So also, in the matter of penalty, the Tribunal in its earlier order dated 28.02.2006 had held that there is a bona fide belief on the part of the applicant in claiming the exemption notification and, therefore, once such was taken, in the present case the Tribunal cannot take a different view and sustain the penalty under Rule 173Q. And further, in the order, there is apparent mistake that instead of Rule 173Q, it was mentioned as Section 173Q.
The Bench considered the submissions and observed -
"4. …, on perusal of record, we find that firstly there was no interest proposed in the show-cause notice nor it is demanded in the adjudication order. We agree that during the relevant time as per section 11AA, the interest was chargeable only after three months from the date of determination of the demand. In the present case, the applicants have paid the duty within such stipulated time period. Therefore, in any circumstances, the interest was not chargeable from the appellant. Therefore, in para 5, the last line starting from “In view of the above order, the merit of the case was decided against the appellant, therefore, demand of duty and interest thereon is sustainable” is rectified and read as “In view of the above order, the merit of the case was decided against the appellant, therefore, demand of duty is sustainable.”
4.1 As regards penalty under Rule 173Q, we find that in para 6 this Tribunal has given a detailed finding of rebutting the claim of bona fide belief of the appellant. Moreover, the judgment relied upon by the applicant for the past period, wherein this Tribunal has set aside the demand on the ground of time bar, in the present case, the demand pertains to the normal period and despite the confirmation of demand for the past period, the appellant continued to avail the exemption. Therefore, in the present case, bonafide belief cannot be entertained by the applicant. Since this Tribunal has given a detailed finding, it cannot be amount to an apparent error on record. Therefore, no case is made out for rectification of mistake with regard to penalty sustained under Rule 173Q."
As regards mention of Section 173Q in para 6 of the order, the Tribunal observed that it was an error apparent on record and so it was corrected to read ‘Rule 173Q of the Central Excise Rules, 1944'.
The ROM application was disposed of in the above terms.
(See 2018-TIOL-1872-CESTAT-MUM)
